Firms are recorded strong growth in orders, output and employment levels in recent weeks and are expecting to report more of the same.
The latest survey by Scottish Engineering found many sector players enjoying buoyant trading conditions amid what the organisation described as "extremely healthy order" levels in the second quarter.
Not only are staffing levels up for the last quarter, but the forecast for the next three months is equally strong," said Bryan Buchan, chief executive of Scottish Engineering, who welcomed the signs of prosperity found in the survey.
With confidence levels increasing, firms are putting plans in place for growth which could result in the sector providing a major boost for the Scottish labour market in coming months.
Mr Buchan noted reports in some quarters of companies 'marking time' on capital investment pending the outcome of the referendum on Scottish independence.
However, the survey found the number of firms that expected to invest in things like plant and machinery out-numbered those that expected to cut spending.
The organisation said: "Capital plans in general maintain a high positive level."
The results of the survey suggest that firms in Scotland are capitalising on the upturn in the UK economy evident since last year.
The increase in orders continued a run that started in the second quarter of 2013.
Small firms led the way in the latest quarter, with 49% of respondents reporting an increase in orders, 20% a decrease and 31% no change. The same percentage of medium sized firms reported an increase in orders as recorded a fall, 36%, All large respondents reported no change.
Some 41% of respondents reported that UK orders had increased, while 21% said they had fallen.
Only 27% of firms increased export orders in the second quarter, while 33% said overseas sales had fallen, resulting in a negative balance of six.
Export orders have fallen for three quarters running.
Scottish Engineering said optimism levels remain very positive, with firms of all sizes expressing confidence.
A balance of 29% of respondents said they were more optimistic than in the previous quarter.
Balances of 29% and 7% expect to increase UK and export orders respectively in coming months.
Around a third of firms, 32%, increased staffing levels in the latest quarter, while 9% cut employee numbers.
A balance of 26% expect to increase staffing in the current quarter. Some firms may face challenges in hiring enough people amid reports of skills shortages.
Mr Buchan welcomed research by Scottish Enterprise that found students are recognising the importance of the manufacturing sector.
"Careers in engineering and technology now stand at the top of the perception ladder, considerably outstripping the old favourites of professions such as law and medicine," he added.
A balance of 25% of respondents plan to spend more on training.
A balance of around 30% of manufacturing and mechanical equipment specialists reported increased orders.
However balances of 13% of electronics firms and 38% of fabricators said orders had fallen.