Hiring activity across Scotland rose “markedly” during March, according to the latest Royal Bank of Scotland Report on Jobs.

The Scottish job market enjoyed its fastest increase in starting salaries since January 2019.

“Permanent staff appointments increased at the steepest rate since late-2018, while the latest upturn in temp billings was the strongest for 28 months, as companies upped their hiring efforts in line with more favourable economic conditions,” said the report.

“Subsequently, demand for staff increased rapidly at the end of the first quarter, although supply remained constricted as the availability of both permanent and temporary staff declined.

“Panellists noted that uncertainty had made candidates wary of switching roles.

“As a result, pay pressures strengthened, as a lack of available candidates induced a greater degree of competition among employers.”

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said: “March data highlighted a great performance for the Scottish labour market.

“Both permanent appointments and temp billings increased at the quickest rates since late-2018 and rapidly overall, a clear sign that the recovery is gaining significant momentum.

“The number of vacancies also rose sharply in March, as companies upped their hiring efforts amid improved demand conditions.

“This placed firmer upwards pressure on pay rates, in part due to increased competition for candidates as supply dipped slightly.

“Overall, the data are very encouraging, and show real movements by firms to reopen the economy in line with the planned easing of lockdown measures.

“Although the recent improvements may not have made up all the lost ground, we are much further towards a robust labour market recovery at the close of the first quarter.”

A renewed upturn in permanent placements was also recorded across the UK as a whole in March — but the UK’s upturn was not as rapid as in Scotland, however.

“Amid reports of increased economic activity at clients, recruitment consultants in Scotland registered a further uptick in temp billings during March,” said the report.

“Moreover, the rate of increase was the steepest since November 2018, with the monthly gain in the respective seasonally adjusted index among the largest on record.

“The UK also saw an accelerated upturn in temporary billings during March, although the rise at the national level was slower than in Scotland.”

The March data highlighted a second consecutive monthly fall in permanent staff supply across Scotland.

“A fourth straight monthly rise in average salaries awarded to permanent new joiners across Scotland was recorded in March,” said the report.

“Anecdotal evidence attributed the latest uptick to greater competition among employers due to a lack of available candidates.

“The rate of salary inflation was the sharpest for over two years, and much stronger than that recorded for the UK as a whole.

“Average hourly pay rates for short-term staff across Scotland continued to rise at the end of the first quarter.

“The rate of wage inflation quickened to the fastest since last December and was solid overall.”