The month saw solid and accelerated increases in both output and new work inflows at Scottish businesses, as well as the fastest rise in employment for over a year, according to Bank of Scotland data.
Growth of private sector business activity in Scotland accelerated to a robust pace in May, and one that was the fastest since April 2011. Both factory production and service sector business activity rose at faster rates, the sharpest in 12 and 13 months respectively.
The pace of economic expansion was broadly in line with the average across the UK as a whole.
The level of new business has now increased for six months running, and the latest rise was the most marked in over two years. Stronger demand across domestic markets was the main factor underlying growth of new business, as new export orders placed with manufacturers fell fractionally on the month.
In line with the improved trends in both output and new business, the pace of job creation at Scottish firms quickened to the fastest in 13 months. Furthermore, Scotland posted a stronger increase in employment than any other part of the UK except for the West Midlands.
Donald MacRae, chief economist at Bank of Scotland, said: "At 54.4 May's PMI is not only the highest for 25 months but has now been above the no-growth level of 50.0 for eight months in a row.
“Output grew in manufacturing and activity was strongly up in the large services sector with an encouraging rise in new orders across the economy evident for the sixth month in succession.
“However, growth appears confined to the domestic market with new export orders falling slightly in the month illustrating the effects of the recession in the eurozone.
“These results show the recovery in the Scottish economy is becoming more strongly embedded with every passing month."
