Scottish firms 'less pessimistic about prospects'
Scottish business confidence has risen for the second consecutive quarter but remains much lower than the UK average, according to a new report.
The Federation of Small Businesses (FSB) found pessimism "subsided" north of the border in the last quarter.
However, a majority of Scottish firms still had a negative outlook about their prospects.
In contrast, confidence among UK firms slipped over the same period but remained firmly positive.
FSB said it had been two years since a majority of Scottish firms were confident business conditions were set to improve.
Its latest business sentiment survey indicated that profit margins in Scotland continue to be squeezed - with a net balance of +16% of firms in Scotland reporting that gross profits fell during the last quarter.
FSB said a key driver for the squeeze was "likely" to be the depreciation of sterling, resulting in higher prices for imported goods and services.
The report also suggested that Scottish investment intentions were more subdued than elsewhere in the UK.
In the last quarter, a net balance of +5.7% of small businesses said they expected capital investment to rise over the next three months, compared with +13.2% in the previous quarter.
Scottish investment intentions now lag the UK as a whole by more than 12%.
FSB Scottish policy convener Andy Willox said: "A majority of Scottish businesses have been gloomy about their prospects for two years.
"While over the course of 2017 a growing share of Scottish firms have shaken off the economic blues, we can't dismiss this long-term trend."
He added: "FSB has highlighted that the cost of employment has been rising for smaller firms for some time.
"Combined with rising input costs - spiked by the fall in sterling - it is perhaps little wonder Scottish investment intentions are underwhelming."