THE SCOTTISH economy has made a good start to 2006, according to a survey released today.

The Royal Bank of Scotland’s Purchasing Managers’ Index shows there has been growth in the output of the Scottish private sector, underpinned by an increase in new businesses.

More jobs have been created in Scotland’s private sector this year, with the rate of growth in March the sharpest since last July.

Increases in manufacturing production and service sector business activity were recorded for the fourth consecutive month in March. Growth remained stronger among service providers, though the rise in manufacturing output was also robust.

Volumes of new orders for private sector companies in Scotland have risen for 33 consecutive months, with the latest increase linked to higher domestic and overseas demand.

However, the latest increases in both new orders and output were the weakest for three months, with rates of expansion slowing in both the manufacturing and service sectors. Growth of new business to manufacturers eased to only a modest rate, as new orders from abroad stagnated.

Private sector firms in Scotland reported a further rise in costs during March, with the rate of inflation the steepest since last October.

Most firms passed on a greater proportion of their increase in costs to customers in higher charges.

RBS group chief economist Dr Andrew McLaughlin said, “The Scottish economy has made a decent start to 2006 with the first quarter’s output keeping a solid pace.

“Business activity moderated in March, but was up in the first quarter as a whole, mainly thanks to a bounce-back from the manufacturing sector which had a poor end to 2005.

“The service sector maintained the pace set in Q4 of last year, despite the slide in travel, tourism and leisure.

“I would expect to see more of the same. The increase in oil prices in recent weeks will put further pressure on manufacturers’ input costs, though margins and competitiveness will likely be buffered by the weaker pound.

“The brightening economic outlook in the Eurozone, which is Scotland’s main target market for exports, should help.”