The economy was again, however, driven by the service sector, masking a downturn at manufacturers. Service firms also revealed a further improvement in demand trends, though data did indicate a slight cooling. As a result, overall growth in new orders eased on the month.

The headline Business Activity Index remained unchanged from the month prior and printed 52.7 in August. Expansions in activity across Scotland have now been noted in each month this year, with growth remaining skewed towards service providers.

Expectations for the year ahead outlook for activity continued to strengthen across Scotland’s private sector in August. The degree of confidence was the highest in one-and-a-half years and historically strong. Firms expect that market conditions and a lax borrowing climate will support growth in the year ahead.

Judith Cruickshank, chair of Scotland board at RBS, said: “The Scottish private sector continued to expand on the back of solid growth in activity observed across its service firms.

“Meanwhile, the manufacturing sector remained suppressed as deteriorating underlying demand trends continued to weigh down on production. While the service sector has been pivotal in supporting growth in private sector activity since the start of the year, there were some signs of cooling demand during August.

“Growth in new orders softened, and services employment also ticked up at a softer pace. That said, firms remain optimistic that growth in business activity will be sustained in the coming 12 months, with expectations across the Scottish private sector hitting an 18-month high. Meanwhile, business expenses increased at one of the weakest paces since February 2021.”

Sebastian Burnside, RBS chief economist, added: “Our latest Growth Tracker report showed business activity rising across all 12 UK nations and regions in August, representing an improvement from the ten that recorded an expansion in July.

“Renewed upturns were seen in the East Midlands and Wales, although it was Northern Ireland that remained the brightest spot in terms of outright growth.

“Business optimism generally softened in August, following a post-election bounce in growth expectations in most areas in July. Nevertheless, sentiment towards future activity remains positive across the board, which is helping to support labour market conditions.

“Alongside broad-based growth in business activity, it was encouraging to see price pressures ease in most areas, in what will be very welcome news for the Bank of England’s policymakers. This will be something to watch going forward as we look to assess the direction of travel of inflation and the timing of further interest rate cuts.”