PRIVATE sector economic growth in Scotland was stronger than that UK-wide last month for the first time since the immediate Brexit vote aftermath in July 2016, and was the fastest in four years, a key survey reveals.

Royal Bank of Scotland’s latest PMI (Purchasing Managers’ Index) report, published today, shows a further acceleration in the pace of growth of the economy north of the Border during July. This contrasts with a sharp slowing of expansion in the UK as a whole, and was driven by a strong performance by Scotland’s services sector.

The seasonally adjusted Scottish PMI, which measures manufacturing and services output north of the Border, rose from 54.5 in June to 55.1 in July, taking it further above the level of 50 deemed to separate expansion from contraction. The rate of increase of new business growth, as well as output, was the sharpest for four years last month.

In contrast, the UK PMI dropped from 55.2 in June to 53.6 last month to signal a sharp slowing of economic growth. This slowdown coincides with an intensification of worries over a no-deal Brexit – fears which weighed on sterling last week.

Business confidence in Scotland dipped to a seven-month low in July in spite of the stronger growth, the latest PMI report shows, with Royal Bank citing “reported concerns regarding the ongoing Brexit process”.

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Sebastian Burnside, chief economist at Royal Bank, said of the Scottish PMI: “It has climbed a bit higher this month and [is] particularly notable because the broader UK index has dropped quite substantially on the month.”

He noted that, before the single month in the immediate wake of the Brexit vote in which Scottish growth was faster than that UK-wide, the previous time the PMI survey had shown relatively stronger expansion north of the Border had been in 2013.

Mr Burnside said: “I think it is something which is quite notable. It is just an acceleration of good, solid performance [and] greater confidence, which is quite reassuring really.”

He cited signs from the survey, which is conducted by IHS Markit, of success in new contract wins for Scottish companies. Mr Burnside highlighted the strong performance of non-consumer-facing services sub-sectors, as well as noting a possible boost to the Scottish economy from higher crude prices.

The Scottish economy has been hit hard in recent years by the widespread impact of the North Sea oil and gas downturn ¬- which was triggered by a tumble in crude prices which began in the second half of 2014.

Reflecting on what had driven growth in Scotland’s private sector economy in July, Mr Burnside said: “It does seem that Scottish firms managed to win a lot of contracts in July. They seem to have had a strong new order book come in.

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“It seems to be broadly concentrated in the services [sector] and not consumer-facing services [but] IT (information technology), professional services and business services.”

He added: “I think those are probably the biggest drivers. I think oil will definitely be helping.”

The pace of new business growth in Scotland in July was faster than that in the UK as a whole.

Although the rate of job creation in the private sector economy in Scotland in July was also faster than that in the UK as a whole, it eased from the pace set in June. Employment growth in the private sector economy north of the Border in June had been the fastest for 52 months.

Mr Burnside said of the slower Scottish employment growth last month than in June: “I wonder if that is a little tied up with Brexit.

“In the last couple of months, there has been a lot of focus on prospects for a no-deal Brexit in particular. I wonder if that is starting to creep in there.”

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Assessing the current state of the Scottish economy and prospects for activity, Mr Burnside added: “The upturn in Scotland’s private sector gathered pace at the start of Q3, with output increasing at the strongest rate in four years. Business activity was supported by a marked strengthening of demand.”

He added: “With backlogs of work rising, this suggests there are sufficient workloads for output to continue rising across the near term.”