Rounding off a lacklustre picture, levels of outstanding business were also down, according to the latest Bank of Scotland purchasing managers index (PMI).
However, both employment and selling prices jumped, with Scottish private sector firms boosting their headcounts in August at the fastest rate in 17 months, and prices hitting a 25-month high.
The index – a single‑figure measure of the month‑on‑month change in combined manufacturing and services output – slid to 49.1 in August.
That was fractionally down from 49.2 in July, where any figure below 50 denotes contraction, and the lowest level since March this year.
Service providers said the downturn in the energy sector prompted a “modest decline” in their business activity, but, more positively, manufacturers said production rose slightly.
Average cost burdens faced by Scotland’s private sector rose again, while firms’ factory gate inflation also lifted to a four-month amid higher import costs.
Nick Laird, regional MD Bank of Scotland commercial banking said, “Scotland’s economic performance continued to face headwinds during August, as the private sector remained in contraction.
“Both output and new business fell for the second month in a row.”