The latest headline Royal Bank of Scotland Business Activity Index shows that a second month of employment growth offered some positivity during a modest month of business activity in March in Scotland.

The report said employment in Scotland “remains more resilient” than the rest of the UK and that private sector firms in Scotland “generally anticipated an expansion of activity” over the coming 12 months.

“Despite increased staffing costs, businesses across all sectors reported an upshift in recruitment as Q1 2026 came to an end,” said the report.

“But global economic challenges throughout the month led to a rise in higher energy and fuel costs, with private sector companies substantially affected.”

Judith Cruickshank, Scotland Board Chair, Royal Bank of Scotland, said: “The latest Growth Tracker data shows that economic activity across Scotland was subdued in March, with output rising only fractionally and demand softening.

“Business confidence has also retreated, coinciding with a sharp rise in cost pressures. Notably, the latest survey highlighted the quickest increase in input costs for over three years.

“While employment remains more resilient than the rest of the UK, the pace of hiring has slowed with employment growth recorded for a second consecutive month.

“Private sector firms generally anticipated an expansion of activity over the coming 12 months and new project streams, which supported hiring activity.”

The report added: “Employment across Scotland’s private sector increased for the second consecutive month in March.

“However, the pace of job creation was similar to that seen in February and modest. Where payroll numbers rose, businesses often linked this to expectations of higher workloads …”