Scotland was the best performer on the employment front among the 12 nations and regions of the UK in December, a key survey reveals.

And the decline in output in Scotland’s private sector economy slowed sharply last month.

In the latest Royal Bank of Scotland PMI (purchasing managers’ index) report, the output index for Scotland rose from 47.1 in November to 49.4 last month, on a seasonally adjusted basis, just below the level of 50 deemed to separate expansion from contraction. The latest reading indicated the least-sharp fall in activity in four months.

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Royal Bank flagged a return to growth by Scotland's services sector last month, albeit this was marginal expansion. Manufacturing output north of the Border fell.

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The bank noted Scottish companies overall recorded a rise in employment for an 11th consecutive month in December.

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Royal Bank said: “Successful replacement of leavers and expectations of growth allowed firms to increase their hiring activity. Moreover, the rate of job creation across Scotland was the strongest of all the 12 monitored UK regions and nations.”

The year ended with another monthly contraction in new business across Scotland, continuing a run of decline that began last July.

Expectations north of the Border about future business activity strengthened in December, with private sector companies across Scotland anticipating a rise in output in 2024.

Royal Bank said: “The degree of confidence was the strongest in seven months and broadly in line with the historical average since 2012. Optimism largely stemmed from hopes that improvements in markets, as well as increased advertising, [and] new contracts and products would bolster growth in activity.”

Judith Cruickshank, who chairs Royal Bank’s Scotland board, said: "Firms in Scotland recorded a contraction in private sector output during December, with the manufacturing sector weighing heavily on overall performance. However, the latest downturn was modest overall and the weakest in four months, in part reflecting a fresh, albeit marginal, expansion in business activity across services firms.

"Employment levels continued to rise, indicating that companies anticipate higher business volumes in the coming months. Job creation was also the strongest in the UK.”