Scottish private sector firms have reported a return to employment growth but at a slower rate than the rest of the UK.
According to a Bank of Scotland report, staff levels rose in August but cost burdens also grew.
More businesses offered price discounts to encourage competitiveness.
Manufacturers also felt the effect of a strong pound with new export orders falling sharply.
Donald MacRae, Chief Economist at Bank of Scotland, said: “August’s PMI was 50.8 recording a fall in the month but still signalling growth. Output and employment grew in all sectors but at modest rates.
"New business grew slowly in both manufacturing and services while new export orders fell for the seventh successive month. The private sector continues to recover from the slowdown at the start of the year but the Scottish economy will have to rely on the Government sector to raise growth to trend levels in the third quarter of this year.“
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