GROSS domestic product (GDP) in Scotland grew at almost four times the rate of that of the UK in August, according to the latest figures.

August’s PMI survey from Bank of Scotland (BoS) indicated a moderate increase in Scottish private-sector output, although growth softened since the 33-month high recorded in July. The latest expansion was the second-fastest since July 2015.

Manufacturing output expanded markedly while service sector activity grew at a more modest pace. Price pressures remained sharp in August.

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The figures were welcomed by the Scottish Government Economy Secretary Keith Brown, who warned that challenges persist due to the uncertainty of Brexit.

“The latest Bank of Scotland PMI figures signal further expansion in Scotland’s private sector output and employment in August, supported by growth in new business, whilst business confidence remains positive,” he said.

“These results are a further vote of confidence in the Scottish economy, with GDP growth almost four times that of the UK over the first three months of the year, and employment at a record high.

“While this is encouraging, Brexit uncertainty continues to cast a shadow over the future economic outlook, threatening jobs, investment and living standards. The Scottish Government will continue to use all of the powers at our disposal to grow the Scottish economy.”

The seasonally adjusted headline from the figures – a measure of the month-on-month change in combined manufacturing and services output – fell to 52.2 in August from 53.8 in July. That said, it remained above the average seen throughout 2017 so far and extended the current sequence of growth to nine months.

Job creation in the Scottish private sector was solid, extending the run of growth to three months. Companies reported that they had hired additional staff to meet rising output requirements.

Fraser Sime, regional director of BoS Commercial Banking, warned that despite the upturn, confidence about future growth prospects softened to a four-month low, indicating a “muted level of optimism from businesses operating in Scotland”.