Business confidence has once again grown to the highest level since before the coronavirus pandemic, with more Scottish firms now expecting to hire staff over the next year.
The Bank of Scotland’s latest business barometer measuring industry confidence has recorded its highest level of optimism since February 2020.
Scottish business confidence rose by six percentage points in May to 15%, while a net balance of 8% are now expecting to increase staff levels – up 17 points from April and the first positive rating since the pandemic.
The survey of 1,200 UK companies, including 95 in Scotland, compares the percentage of firms that are positive or negative in outlook to calculate the balance of opinion.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up five percentage points at 10%.
Alongside their optimism in the economy as a whole, which was up six points to 19%, this gives a headline confidence reading of 15%.
Overall UK business confidence rose four points in May to 33%, a fourth consecutive month of growth.
Every country and region of the UK reported a net positive confidence reading in May, with almost all areas recording an increase in confidence.
Yorkshire and the Humber was the most positive region, up 12 points to 44%, followed by the South West where it rose 12 points to 42%.
Wales reported the biggest month-on-month increase, increasing 18 percentage points to 27%.
Broken down by individual sector, manufacturing reported the sharpest increase in business confidence with a 13-point rise to 53%.
Construction confidence was up seven points to 35%, and retail gained five points to a four-year high of 44% – with the easing of lockdown measures leading to hopes of stronger business conditions, although the wider services industry confidence posted a rise of just one point to 26%.
Fraser Sime, regional director at Bank of Scotland commercial banking, said: “With lockdown restrictions easing further in May, Scotland’s hospitality and tourism sectors were able to join non-essential retail in reopening their doors, a move which has helped to boost confidence across the country.
“Encouragingly, for the first time this year, businesses are looking to hire staff.
“This is a clear indicator that we are moving in the right direction with firms more optimistic about the coming months.
“We’ll continue to stand by Scottish businesses as they work towards what we all hope will be a busy summer.”
Paul Gordon, a managing director at Lloyds Bank Commercial Banking, said: “The UK’s regions and nations continue to report positive business confidence in recent months, which is a welcome change from where we were at this time last year.
“In the sectors, manufacturing continues to outperform, reflecting strong domestic demand, while retail once again reported stronger confidence as restrictions ease across the UK.”
Hann-Ju Ho, a senior economist for Lloyds Bank Commercial Banking, said: “A fourth consecutive monthly increase in business confidence, and the highest in three years, leaves us hopeful for the UK’s economic recovery.
“The increase in confidence was buoyed by a further easing of lockdown restrictions and a rise in optimism about the wider economy.
“While we need to wait and see how the months ahead will unfold, the recent rise in positive outlook is an encouraging sign that firms are emerging from the Covid-19 crisis with renewed resilience and vigour.”