Economic growth in the private sector has slowed towards the end of the first quarter of the year, a report suggests.
The sector expanded only modestly during March, according to the Bank of Scotland’s latest purchasing managers index (PMI).
Levels of new business increased at just a moderate pace, although job creation is said to have been stronger.
The PMI is compiled from monthly replies to questionnaires sent to purchasing executives in around 600 manufacturing and service sector companies.
It registered at 51.1 for March, down from the 52.5 recorded for February. Anything above 50 constitutes growth, while 50 means no change and below 50 suggests economic contraction.
March saw the volume of new work at Scottish businesses increase for the fourth month running but at the slowest rate over this period.
Manufacturers recorded no change in the volume of sales to international clients compared with the previous month.
More jobs were created in the private sector and at the fastest rate of growth in eight months, according to the PMI, with manufacturing and services companies said to have recruited additional staff at modest rates.
The report’s data for March points to a further rise in costs thanks to higher fuel prices and a weak pound.
Donald MacRae, chief economist at Bank of Scotland, said: “The PMI for March showed the private sector of the Scottish economy recording a modest expansion. The level of new business rose, accompanied by an increase in the number of jobs in both manufacturing and service sectors. But export activity was unchanged in the month.
“Input-cost inflation was marked across all sectors. The PMI has now been above the no-growth level of 50 for six consecutive months, suggesting the Scottish economy is continuing its slow recovery from recession.”
A Scottish Government spokesman said: “It is very welcome to see further expansion in the private sector in Scotland - especially as this is the sixth consecutive monthly expansion in the Bank of Scotland PMI index.
“However we are aware that business conditions remain challenging and that is why we are investing in jobs, training and ensuring we have the most competitive business environment anywhere in the UK.
“Our budget includes a tax relief package for business worth over £540m this year and we are bringing forward a further £385 million package of economic stimulus to support jobs across the country.
“The Scottish Government is taking action where we can, and we are seeing results, but there is so much more that we could be doing with the full economic and fiscal powers of independence to strengthen our economy and create jobs.”