The Scottish private sector saw a second successive monthly rise in business activity, with underlying data showing quicker growth across both the manufacturing and service sectors.
According to the latest Royal Bank of Scotland PMI data, the rate at which private sector output grew was the strongest in nine months, with the Scotland Business Activity Index rising from February's 51 to 52.9 in March.
This compared favourably against the UK as a whole (52.2), where the rate of expansion slowed.
Furthermore, firms across Scotland noted a solid and accelerated rise in new business inflows in March. In turn, back-to-back expansions were noted in private workforce numbers, again the latest rate of job creation quickening on the month and signalling the strongest intake of staff since last July.
Private sector companies across Scotland signalled a second monthly rise in volumes of new business at the end of the first quarter. The upturn was quickest since last May.
The rise in business inflows was attributed to an array of reasons, including increased advertising and investment, stronger sterling against the dollar and improved client demand. Nonetheless, the uptick in new order inflows was weaker than that recorded for the UK as a whole.
While the degree of confidence weakened in March, due to a slight dip in optimism at service providers, business sentiment towards 12-month activity was highly positive and above the historical trend.
Optimism stemmed from greater client enquires, new business development, higher marketing and new contracts in the pipeline. Confidence across Scotland, however, posted the third-weakest of all the monitored UK regions, ahead of the north east of England and Northern Ireland.
Firms across Scotland raised their payroll numbers for the second successive month in March. The rate of job creation was the fastest seen in eight months, with only Northern Ireland registering stronger growth across the UK.
The positive performance of the sector supported a stronger intake of staff, with the underlying data pointing to quicker upturns in workforce numbers across both the manufacturing and service sectors.
Scottish firms were able to reduce their outstanding business during March, thereby stretching the current run of contraction to 10 months. The rate of backlog depletion remained unchanged from the preceding survey period, the joint-softest decrease in unfinished work in the sequence. The rate of decrease in backlogs across Scotland was quicker than that seen at the UK level.
Continuing the trend observed since December 2022, private sector firms noted a further cooling in input cost inflation during March. The rate of growth was the weakest in 22 months and only marginally faster than the UK-wide average. Nonetheless, the pace of inflation was above the long run average, with respondents blaming wage, food and energy costs.
In line with the strong growth in prices, private sector firms across Scotland raised their charges sharply. That said, the pace of charge inflation was the second-softest in 22 months, behind February’s reading. Charges levied for the provision of goods and services across Scotland rose at a similar pace to that seen across the UK as a whole.
Judith Cruickshank, chair of the Scotland board at RBS, commented: "Looking ahead, confidence across the private sector faltered slightly from the recent high seen in February.
"Nonetheless, private sector firms across Scotland were strongly confident in regards to longer term future output."
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
