Further, following a modest fall in July, August data revealed a renewed rise in output across Scotland

“However, the uptick in private sector activity was only marginal,” said the report. “Growth has now been observed in three of the last four months.

“At the same time, the downturn in new business showed signs of easing, with the rate of contraction among the weakest seen over the current 11-month sequence of decline and only marginal.”

The headline Royal Bank of Scotland Growth Tracker — a seasonally adjusted index that measures the month-on-month change in the combined output of Scotland’s manufacturing and service sectors — surpassed the neutral mark of 50.0 in August, climbing from 48.7 in July to 50.3.

The slight increase in output was driven by the service sector, which reported a rise in enquiries, new contract wins, and successful marketing campaigns.

Meanwhile, output continued to contract across the Scottish manufacturing sector. However, the rate of decline was the weakest in nearly a year, suggesting that production levels moved closer to stabilising.

More encouragingly, business sentiment improved in August as more firms on balance anticipate output growth in the coming 12 months. However, companies were cautious with regards to payrolls, as job shedding persisted, with many attributing this to rising labour costs.

Judith Cruickshank, chair, Scotland Board, Royal Bank of Scotland, said: “Businesses across Scotland experienced a fresh rise in activity in August, which helped to offset a modest reduction in the previous month.

“Forward-looking indicators suggested a relative improvement in conditions facing firms, with the downturn in new business easing notably, and companies expressing a more optimistic outlook for future activity.

“However, despite these improvements, companies remained cautious about expanding their workforce numbers. Employment declined for the third consecutive month, with firms partly linking this to rising labour costs.

“Although cost pressures remained sharp, they showed signs of easing compared to July. At the same time, greater confidence around the outlook and demand led firms to raise their charges at a stronger pace.”