In the midst of the opening quarter of 2024, there was a notable uptick in new business contracts reported during the month of February. This is according to the Royal Bank of Scotland’s Business Activity Index, which measures monthly changes in the combined output of Scotland’s manufacturing and service sectors.

“February numbers for Scotland signalled solid gains across the private sector,” said Judith Cruickshank, chair of the Scotland board at the Royal Bank of Scotland.

Last month, the index rose to 53.1 from 51.7 in January, which is the strongest expansion in private sector output since last June. This is, however, still weaker than the UK average of 53.3, according to S&P Global. 

The growth in output was primarily driven by the service sector, while manufacturing output saw a softer contraction, easing the downward pressure on overall performance. Employment levels also saw a boost, with both manufacturing and service sectors recording growth in staffing levels, reaching a nine-month high in job creation.

Business sentiment for the year ahead in Scottish private sector activity also strengthened to an 11-month high in February. This optimism is supported by planned investments, advertising efforts, and hopes for improved economic conditions. Nevertheless, confidence in Scotland ranked second-weakest among the 12 monitored UK nations and regions, with only the northeast of England recording weaker sentiment.

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Private sector companies in Scotland also tackled their backlogs during February, with manufacturing firms citing a decline in new orders. However, this was partially offset by a rise in backlogs at service providers.

“The fresh growth seen at the start of the year was sustained and even strengthened, as the downward pressure from the manufacturing sector dissipated slightly, and growth across the service sector was maintained,” continued Cruickshank

“However, the latest expansion across the Scottish private sector was heavily reliant on the service sector, while goods producers failed to perform under the weight of a worsening demand climate. That said, the recent expansion in employment across both the sub-sectors alludes to more balanced growth in the coming months.”