By Daniel Hunter

The second quarter started brightly for private sector firms north of the border, with latest PMI data from Bank of Scotland showing faster increases in both business activity and new work.

Companies responded by creating more jobs, with employment rising at the fastest pace in nine months. Input price inflation meanwhile moderated somewhat from March’s recent peak, though cost pressures remained sufficiently high to lead to a further increase in output prices.

The headline Bank of Scotland PMI climbed to a 12-month high of 53.1 in April, from March’s reading of 51.1, signalling a solid increase in private sector business activity north of the border. The expansion was broad-based by sector, with a return to growth in factory output accompanying a further rise in activity at services firms. Moreover, Scotland outperformed the UK as whole.

Supporting growth of private sector activity in Scotland was a fifth straight monthly increase in the volume of new work placed with businesses. The latest rise was faster than that observed one month earlier, although slower than the increase seen UK-wide. There was meanwhile no change in the level of new export orders placed with manufacturers, as was the case in March.

The pace of job creation quickened for the third time in the past four months, reaching the fastest since last July. Staffing levels rose at both manufacturers and service providers over the month, with similar rates of increase in each sector.

Outstanding business in Scotland’s private sector economy was reduced only marginally during the latest survey period, and at the slowest rate in the ongoing three-month sequence of decreasing backlogs.

April saw a dip in the rate of cost inflation facing businesses in Scotland from March’s recent peak. Nevertheless, the month-on-month increase in cost burdens was still strong, with only Northern Ireland seeing a steeper rise among the 12 UK regions monitored by PMI data. Firms in Scotland highlighted paying more for energy, food and, as a consequence unfavourable currency movements, a number of imported items.

Output prices meanwhile increased for the fourth month in a row. Although only modest, the latest rise was nevertheless the most marked since last September.

"April’s PMI climbed to a twelve month high signalling growth in the private sector of the Scottish economy at the start of the second quarter of the year," Donald MacRae, Chief Economist at Bank of Scotland, said.

"Both business activity and employment grew in the manufacturing and services sectors while the volume of new business rose for the fifth month in a row. However, demand growth was largely UK based with the level of new export orders showing a flat trend for the last five months. These results suggest the Scottish economy is now beginning a more robust recovery.”

Join us on
Follow @freshbusiness