Business confidence in Scotland rose six points during May to 15%, the highest reading since February 2020, according to Bank of Scotland Commercial Banking.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up five points at 10%.
When taken alongside their optimism in the economy – up six points to 19% – this gives a headline confidence reading of 15%.
The Business Barometer questions 1,200 businesses each month, the the May data revealing that 8% of businesses in Scotland expect to increase staff levels over the next year, up 17 points on last month and the first net-positive reading in 15 months.
Overall, UK business confidence rose four points in May to 33%, a fourth consecutive month of growth.
The reading comes after non-essential retail and hospitality firms reopened their doors to customers. Businesses reported an increase in optimism about their own trading prospects, up two points month-on-month to 28%, while confidence in the economy grew by six points to 38%.
Firms’ hiring intentions also rebounded to pre-pandemic levels, with 14% of UK businesses expecting to make new hires in the next 12 months – the highest reading since February 2020.
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. ”
From a sector perspective, manufacturing reported the sharpest increase in business confidence, up 13 points 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.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, added that 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.”
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