BUSINESS in Scotland has “rebounded” in activity thanks to the service sector, according to a new report.

The latest Royal Bank of Scotland (RBS) PMI shows growth in April came despite a fall in manufacturing output.

Firms say they expect activity levels to increase over the coming year, but the degree of confidence slumped to its lowest in two-and-a-half years.

Malcolm Buchanan, chairman of the RBS Scotland Board, said: “At first glance, latest survey data for Scotland revealed an improvement in economic conditions, but upon closer inspection, we see that the upturn in April was solely driven by the service sector, as manufacturing weakness continued into Q2.

“While service activity was given a boost by a small revival in demand, manufacturing output continued to lag as order book volumes shrank, with economic uncertainty and a sluggish global goods-producing market weighing on manufacturers.”

The seasonally adjusted headline PMI increased to 51.0 in April, from 49.6 in March, signalling a return to expansion in private sector output.

While service providers mentioned improvements in demand, manufacturers reported weakness in the global goods-producing market.

The overall rate of private sector growth in Scotland was broadly in line with that recorded for the UK as a whole.

Manufacturers and service providers both expanded employment in April. While the rise was stronger at service providers, manufacturers posted a revival to job creation following a decline in March. This led to the aggregate rate of employment growth strengthening to a six-month high.

Meanwhile, Shopping footfall in Scotland has increased for the first time in nine months, according to latest figures.

Data from the Scottish Retail Consortium (SRC) and Springboard shows the country was the best performing across the UK in April.

Scotland’s footfall saw an increase of 0.7% while the UK average was -0.5%. The town centre vacancy rate also dropped to 9.8% last month, down from 12% in January. This is now below the UK average of 10.2%.

David Lonsdale, SRC director, said: “This is a more favourable set of results. The resumption of growth in shopper footfall after nine months of decline is positive and bodes well ahead of the publication of our retail sales data for April. “The challenge will be for retailers to convert that into an enhanced performance at tills, and it appears those retail destinations which benefited from rising footfall were the ones which offered consumers a ‘day-out’ experience when shopping.”

The figures also show Scotland’s high streets were the best performing of all UK regions, with an increase of 1.8%.

Retail parks also saw an increase – with growth of 1% – but shopping centre footfall fell by 1.6% in April.

The numbers contrast with the same period in 2017, when footfall was 6.7% lower in high streets, 0.8% lower in retail parks and 4.7% lower in shopping centres.

Diane Wehrle, marketing and insights director for Springboard, said: “The context over the past two years is critical here, as the significant drop in footfall in April last year means that Scotland’s footfall is still at a lower level than in April 2017.

“The superb weather over Easter clearly delivered a boost to coastal towns and historic cities across the UK which are magnets for domestic and overseas tourists, both of which saw footfall rise in April.”