Business confidence in Scotland rose six points to 34% in August as coronavirus restrictions eased, according to research.
Overall confidence in the economy also increased, rising by 20 points to 43%, the latest Business Barometer from Bank of Scotland Commercial Banking found.
However companies in Scotland reported marginally lower confidence in their own business prospects month-on-month, down eight points at 25%.
The Business Barometer questions 1200 businesses around the UK monthly and provides early signals about UK economic trends regionally and nationwide.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “With most of the Covid-19 restrictions easing in August, businesses across Scotland were able to return to normal trading for the first time in 18 months and are feeling optimistic about what this means for the economy.
“With confidence on the up and even more firms now planning on making new hires, the country is taking great steps towards recovery and growth.
“We’ll continue to support businesses through the coming months as they aim to capitalise on this positive momentum.”
The research found that a net balance of 20% of businesses in Scotland expect to increase staff levels over the next year, up seven points on last month.
The study found notable strength in sectors benefiting from the further easing of Covid restrictions.
The services sector saw the greatest month-on-month increase, rising by eight points to 36%, the highest since January 2018.
It also picked up in manufacturing and construction – both up seven points to 40% – led by rises in trading prospects for the year ahead.
Retail confidence posted a two-point rise to 34%, remaining below the recent peak in May.
Overall UK business confidence rose six points in August, reaching 36%, the highest since May 2018.
Gareth Oakley, managing director for business banking at Lloyds Bank, said: “It is clear there is still some level of uncertainty on inflation and the impact of price pressures, but with further boosts to confidence in the services, manufacturing and construction sectors we can be hopeful that demand across all sectors will drive consumption throughout the rest of the year.
“The last few months of the year will be pivotal to the future of UK economic growth and we remain by the side of businesses as the country continues to reopen.”