Recruitment and growth in the Scottish private sector has gained momentum since the start of the year, according to the latest Bank of Scotland PMI.
The purchasing managers’ index signalled a moderate and accelerated expansion of business activity north of the border.
Rising to a seven-month high, output and new work increased faster than during December, led by growth in the services sector, according to Bank of Scotland chief economist Donald MacRae.
Improved business conditions and added pressure on operating capacity also led firms to create extra jobs over the month.
“Much of the improved trend in business activity in Scotland reflected an accelerated increase in new work placed with firms during January,” said the bank.
“Intakes of new business rose for the second month in row, at the fastest pace since March 2012,” it added.
This was driven by a rise in demand in the domestic market, with a slight drop in new export orders recorded at manufacturers.
Ending a 16-month sequence of depletion and pointing to a greater pressure on operating capacity than in previous months, the level of outstanding business at private sector firms in Scotland was unchanged from that registered one month before.
“Accordingly, firms continued to add to their payroll numbers during January, raising employment levels for the seventh time in the past eight months,” said the bank. However it conceded the overall rate of net job creation was nonetheless still “modest” and “slower than the UK average”.
January data showed a further rise in cost burdens facing businesses north of the border, with higher fuel, labour and raw material costs mentioned by panellists.
However, the rate of inflation in operating costs eased to the slowest in seven months, and was down on the long-run series average.
Output prices increased on average, with a rise in factory gate prices more than offsetting reduced tariffs in the tertiary sector.
“The rate of decline in manufacturing output was modest and has eased since the previous month, but export demand remains weak,” said Professor MacRae.
“This result suggests the Scottish economy not only started the year in growth mode but has maintained moderate growth throughout January.”