The latest Bank of Scotland regional Purchasing Managers’ Index (PMI) showed business activity in Scotland returned to growth in December, with a rebound in job creation and a slight increase in new order wins.

The expansion was broad-based across Scotland’s manufacturing and service sector, with panel members linking this to stronger underlying demand.

The December data showed a return to growth in Scotland’s workforce numbers as the rate of job creation hit a four-month high.

However, cost pressures intensified further in Scotland’s private sector with the rate of inflation quickening to a 67-month high, leading to an increase in the prices charged for goods and services.

At 50.7 in December, the seasonally adjusted headline Bank of Scotland PMI rose from November’s 49.4 to its highest level for three months.

Although output returned to growth, the pace of the increase remained below “the long-run series average,” the survey showed.

Scotland’s private sector registered a slight increase in new business in December, ending a two month decline.

Service providers linked the increase in costs to higher prices for fuel, timber and food, while goods producers focused on the depreciation of the pound.

Average selling prices set by Scotland’s businesses rose at their fastest level since April 2011.

“With output, new orders and employment all returning to growth, and backlogs slowing, Scotland’s economy bounced back at the end of 2016,” said Nick Laird, regional managing director, Bank of Scotland Commercial Banking.

“The improvement in business conditions across both the manufacturing and service sectors puts Scotland on a firmer footing as we start the New Year.

“Headwinds remain however, principally through the continued increase in input costs, which rose at their sharpest pace for 67 months.

“Given the strain this will place on operating margins, firms throughout Scotland will undoubtedly be looking for this to ease during the year ahead.”