Business confidence increases in Scotland as Covid rules relax, says bank

The Royal Bank of Scotland’s Business Activity Index has shown an expansion in monthly output, rising from 52.7 in December to 53.7 in January.

The Royal Bank of Scotland’s Business Activity Index has shown an expansion in monthly output (PA) (PA Archive)

Scotland’s business owners are the most confident they have been in six months, a bank’s analysis has said, as the country’s economy continued to rebound from coronavirus.

For the eleventh month running, the Royal Bank of Scotland’s Business Activity Index has shown an expansion in monthly output, rising from 52.7 in December to 53.7 in January.

Any number above 50 shows expansion, analysts said, and Malcolm Buchanan, the chairman of the Scotland Board at the bank, said that “growth picked up to a solid pace amid a further upturn in new orders”.

But the growth was driven by services, with manufacturing output falling as supply issues and weak demand continued to weigh heavily on the sector.

And firms reported surging material, utility, fuel and wage costs, as well as hikes at suppliers.

But, the bank said, the rate of price inflation eased further from November’s peak.

Mr Buchanan said: “The easing of Covid-19 restrictions over the coming months are expected to provide a boost to private sector firms, however, with business confidence hitting a six-month high in January as companies expect demand conditions to improve further over the year.”

Scottish companies recorded improved expectations for the next 12 months in January.

The level of positive sentiment hit a six-month high, with optimism attributed through anecdotal evidence to hopes of strong demand as coronavirus restrictions are loosened.

Both service providers and manufactures are more optimistic about the year ahead, the bank said.