The Bank of Scotland’s Purchase Managers Index (PMI) for February showed both output and employment at private sector businesses increased at accelerated rates.
The rise in staffing numbers was the steepest in four years, underpinned by increases in recruitment in the service sector.
Meanwhile, costs of running a business eased for the third month in a row, with service providers and manufacturers both reporting weaker monthly rises in input prices.
The rate of cost inflation was the slowest for 17 months, but was still faster than the UK average.
Overall, Bank of Scotland PMI – a seasonally adjusted index monitoring activity across Scotland’s manufacturing and service industries – rose from January’s mark of 51.4 to 51.7.
It was the fastest rise in business activity for five months, but Scottish output increased at a slower rate than across the UK as a whole.
The index numbers are calculated from the percentages of respondents reporting an improvement, no change or decline. Readings above 50.0 signal an increase or improvement; readings below 50.0 signal a decline or deterioration.
The Bank of Scotland PMI is produced by Markit and features survey data from about 600 companies based in Scotland and operating in manufacturing and service sectors.
While there was a “solid increase” in new business, growth was “entirely confined” to the service sector.
Donald MacRae, chief economist at Bank of Scotland, said: “The PMI was positive for the 14th month in a row in February signalling the private sector of the Scottish economy continues its slow recovery from recession.
“Output grew in both manufacturing and services while employment increased at the fastest rate in four years largely driven by the service sector.”
Mr MacRae went on: “Growth in new orders was strong in the service sector but new export orders were unchanged from the previous month illustrating the fragility of the eurozone economies.
“These results confirm the diminishing risk of a double- dip and increase expectations for a stronger recovery throughout 2012.”
Responding to the PMI study, finance secretary John Swinney said: “This survey shows that Scottish private sector business activity expanded for the fourteenth consecutive month in February. This is the fastest increase in business activity in five months and this is complemented by as a rise in private sector employment for the fourth consecutive month.
“The Scottish Government is doing everything it can to support the recovery but the UK government has to take urgent action to promote investment, employment and economic growth.
“I’ve written to the Chancellor ahead of this week’s budget to ask that he considers the introduction of a National Insurance holiday for employers who recruit young people, and additional capital investment to provide a targeted economic stimulus.”