GROWTH in Scotland's private sector economy accelerated in June, according to survey findings that will help to boost hopes the country will avoid a sustained double-dip recession.
Research for the latest PMI Index for Bank of Scotland points to a marked pick-up in activity in June compared with May, when the growth rate had dropped to a 17-month low.
With the headline output index reading increasing to 52.5 in June from 50.8 in May, the latest findings will help to allay fears that Scotland's tentative recovery is petering out.
The survey found private sector employment increased in June following a lull in May. The index has been above the 50 mark that separates expansion from contraction for 18 months running.
Donald MacRae, chief economist at Bank of Scotland, welcomed signs of a broad-based improvement in June.
He said: "The June PMI showed a welcome pick-up in the Scottish economy with both manufacturing and services recording growth. Employment rose across all sectors while cost pressures continued to ease."
Completed by Markit, the PMI survey recorded a big increase in activity in the key financial services sector, which has been grappling with the fallout from the turmoil in the banking industry.
Finance Secretary John Swinney said: "Despite the ongoing challenges, there are positive indications that the recovery continues in Scotland."
Mr Swinney highlighted the fact that Scotland outperformed the UK on some key measures covered by the PMI exercise. The UK output index reading fell to 51.4 in June from 52.1 in May.
In Scotland, the employment index reading increased to 51.4 in June, from 50 in May. The UK reading fell to 50.8 from 51.2.
The findings may indicate that if Scotland is found to have entered a technical recession, defined as two successive quarters of falling output, any contraction will be shallow and short lived.
The latest official figures show Scottish gross domestic product fell by 0.1% in the fourth quarter of 2011. The Scottish Government will publish estimates for the first quarter of 2012 on July 18.
The UK entered a recession towards the end of last year. The Office for National Statistics has calculated the UK economy contracted by 0.3% in the first quarter of 2012 and by 0.4% in the last three months of 2011.
Other survey findings at the weekend suggested the outlook for the UK is gloomy.
UK business confidence sunk to its lowest point this year in June amid concerns about the impact of the financial problems in the eurozone, according to the findings of the latest Business Trends report by BDO accountants.
In a survey of chief financial officers from 137 major companies, Deloitte recorded the biggest fall in confidence since 2007.
Any optimism about conditions in Scotland has to be offset by concern that problems in the eurozone and the slowdown in other parts of the UK will cause problems north of the Border.
Mr Macrae noted new orders rose only marginally in Scotland in June, albeit faster than in the UK.
Manufacturers recorded the sharpest fall in export orders since December.
"The marginal rise in new orders overall and the fall in new export orders illustrate the challenge of maintaining growth in the face of a widespread slowdown in the UK and the eurozone economies," said Mr MacRae.
The activity index for the services sector increased to 53.1 in June, from 50.6 in May.
The reading for the financial services sub-sector increased to 53.5 from 50.8.
The business services activity index increased to 54.4 from 52.4 in May.
The travel, tourism and leisure sub-sector returned to growth with a reading of 51.8, up from 49.6 in May.
The manufacturing output index fell to 50.6 in June, from 51.5 in May.
The composite new orders index edged up to 50.7 in June in Scotland, from 50.6 in May.
The UK reading fell to 50.4 from 52.1.
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