Private sector firms in Scotland recorded a third successive monthly rise in employment during August, according to the latest Royal Bank of Scotland Growth Tracker.
“The pace of job creation was broadly unchanged from July and was among the strongest recorded over the past two years,” said RBS.
“Respondents often linked the latest rise to company expansion plans, new projects and efforts to replace leavers.”
The latest RBS Scotland Growth Tracker indicated that business conditions across Scotland’s private sector moved closer to stabilisation in August.
The headline Royal Bank of Scotland Business Activity Index, a seasonally adjusted index that measures the month-on-month change in the combined output of Scotland’s manufacturing and service sectors, rose to 48.9 in August from 47.3 in July.
The latest reading signalled a modest fall in private sector activity. Where activity fell, firms often attributed this to subdued market conditions and fewer new orders.
Judith Cruickshank, Scotland Board Chair, Royal Bank of Scotland, said: “The latest data for Scotland present a mixed picture for August, albeit one that is more positive compared to recent months.
“The economy is showing tentative signs of improvement, with business optimism climbing to a six-month high and the pace of decline easing in both output and new orders.
“Employment remains a clear source of strength. Sustained job creation, despite challenging demand conditions, suggests that firms’ improved confidence is feeding through to hiring activity, with payrolls being lifted in anticipation of new projects and expansion plans.
“The inflationary picture remains challenging, but the direction of travel is encouraging. Cost pressures are easing and, if that continues, we could see price increases begin to moderate in the months ahead.”
The RBS Scotland Growth Tracker said Scottish firms became increasingly confident about activity prospects over the next 12 months.
The level of optimism rose further from April’s recent low to a six-month high, but remained weaker than the UK average.
Firms hoped that continued investment in new equipment and new contract wins would help to drive growth.
Scottish businesses raised their prices at a sharper rate in August. The increase in selling prices was linked to the pass-through of higher input costs to clients.