Business activity in Scotland rose in May, the first increase in output for six months, according to the Royal Bank of Scotland Growth Tracker.
The seasonally adjusted index measures the month-on-month change in the combined output of manufacturing and service sectors.
It increased in Scotland from 47.4 in April to 50.5 in May, though the rate of expansion was marginal and similar to that seen across the UK as a whole.
The growth in activity was primarily driven by a stronger service sector performance, where a fresh increase in activity was supported by a renewed upturn in new business. This helped to offset a further downturn in manufacturing output.
Sebastian Burnside, RBS chief economist, said: “Following a near-universal decline in output across the 12 monitored UK regions and nations in April, Scotland was one of six areas to experience an upturn in business activity during May.
“This uptick in activity was primarily driven by the service sector, where a strong expansion helped to offset a further decline in manufacturing output.
“Demand conditions meanwhile moved closer to stabilising, as the decline in new business was only marginal and the softest in six months. Additionally, firms exhibited greater confidence in their projections for business activity over the year ahead.
“The Scottish labour market demonstrated resilience, with firms adding to their workforce numbers for the first time in six months. Notably, it was the only tracked area to report an increase in employment.
“As was the case across all 12 UK regions and nations, cost pressures eased across Scotland in May. In fact, Scotland recorded the weakest rate of cost inflation of all monitored areas, albeit one that remained sharp overall.
“Charges levied for Scottish goods and services were also raised at a slower pace than in April.”
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