Key to the renewed expansion was a rise in new business, following a contraction in the previous survey period, alongside a mild rise in workforce numbers.

The seasonally adjusted headline Royal Bank of Scotland Business Activity Index - a measure of combined manufacturing and service sector output - posted 52.0 in January, up from 50.0 in December, to signal a modest increase in Scottish private sector activity following stagnant output in December. Panellists linked the increase with improved client demand.

That said, the uptick was subdued in the context of the series history and softer than that seen at the UK level.

By sector, service providers recorded an eighth successive monthly rise in activity, with growth quickening from December. Meanwhile, output continued to fall in the manufacturing segment, although the decline was the softest in the current eight-month sequence of reduction and only fractional overall.

Overall demand conditions rebounded in January, with incoming new business rising following a contraction in December. Anecdotal evidence associated the rise with improved client demand as a result of increased confidence and subsiding uncertainty.

That said, the rate of increase was only mild overall. Moreover, of the ten monitored UK areas to record growth, only the South West reported a softer increase than Scotland (Northern Ireland and the North East saw declines).

Amid improved demand, Scottish private sector firms recorded a rise in workforce numbers during January. The rate of increase was only marginal, however.

At the same time, the level of outstanding business at Scottish private sector firms fell, as has been the case in all but one of the past 16 months. Moreover, the rate of backlog depletion gathered pace from December.

On the price front, cost burdens facing Scottish private sector firms increased further during January, with respondents noting greater costs for fuel and raw materials as well as higher prices at suppliers. Moreover, the rate of cost inflation was the fastest for seven months and marked overall.

Higher input costs were partially passed through to clients during January, as selling prices increased at the quickest rate for eight months.

January data indicated improved confidence towards activity over the next 12 months, with the level of positive sentiment the highest since March 2019.

Malcolm Buchanan, chair, Scotland Board, Royal Bank of Scotland, said: “The Scottish private sector recorded a modest increase in business activity during January, with the headline Business Activity Index reaching a 14-month high, driven partly by a renewed rise in new business. That said, the uptick remained historically subdued and softer than that seen across the UK as a whole.

“At the sector level, services recorded a quicker increase in activity, whilst the manufacturing segment remained weaker, noting an eighth successive fall in output. Positively, firms’ output expectations for the coming 12 months strengthened in January, with respondents linking confidence to a clearer outlook and hopes of improved demand conditions. Moreover, the level of positive sentiment was the highest since March 2019.”