Manufacturing led the way in Scotland last month, as output rose at its fastest pace in nearly three years, according to a survey by the Bank of Scotland.

Its latest PMI, which measures changes in combined manufacturing and services output, found that growth was driven by a ‘steady expansion’ in new business. Manufacturing saw strong growth in new orders, while new work in the service sector grew at a more moderate rate.

The survey also indicated an increase in recruitment, with job creation reaching a 31-month high. The PMI stood at 53.8 in July, the highest figure since October 2014 (a number above 50 indicates expansion). Scotland’s private sector has now grown for eight months in a row, according to the bank.

Fraser Sime, from Bank of Scotland Commercial Banking (pictured), said: “July’s survey results showed the Scottish private sector moving up a gear, as the PMI posted its strongest result in 33 months.

“This good news was fuelled by the service sector returning to meaningful growth, alongside a faster increase in manufacturing output. Job creation remained positive for the second month running, with July marking the fastest expansion in employment in over two and a half years.

“Employment growth was consistent across the manufacturing and service sectors. Input price inflation remained strong in the latest survey, with many firms citing wage inflation and the exchange rate.

“That said, the positive effects of a subdued currency could be seen in the growth of manufacturing exports in July.”