Business confidence in Scotland has risen 11 points in April to 28%, despite increasing inflation and costs, according to a new report.
The Bank of Scotland report said companies cited higher confidence in their own prospects month-on-month, up 16 points at 34%.
Optimism over the economy was also up five points to 21%, giving a headline confidence reading of 28% in the bank’s monthly business barometer.
However, certainty in the retail and service sectors was weaker than at the start of the year, with firms worried about the wider economic outlook.
The overall picture comes as welcome news after projections showed confidence among business leaders plunging in previous months.
Scottish firms told the bank they will be looking at investing in their teams as a priority, as well as expanding into new markets and looking to enhance their offerings.
The bank survey questions 1,200 firms every month and provides early indicators about UK economic trends.
Fraser Sime, regional director for Scotland at Bank of Scotland commercial banking, said: “Rising levels of inflation coupled with growing cost pressures have hit businesses hard in recent months.
“The retail sector has been particularly impacted by these turbulent economic conditions, forcing many firms to start increasing prices.
“But despite these headwinds, Scottish firms have shown tremendous resilience as business optimism rebounds in April.
“We’ll continue to be by the side of Scottish businesses to help steer them through what we hope will be a busy summer season.”
Paul Gordon, managing director for SME and mid corporates at Lloyds Bank commercial banking, said: “The challenges that businesses are facing continue to grow with no clarity on when inflationary or supply chain pressures will ease alongside the ongoing war in Ukraine.
“However, we can already draw positives from some of the changes at a regional and sector level in April, which demonstrates that businesses are not being universally impacted by the challenges faced.