The latest Bank of Scotland regional Purchasing Managers' Index (PMI), which produces a single-figure score for manufacturing and services output, rose from 51.1 in June to 53.8 in July, the highest since October 2014.
Recruitment across Scotland's private sector rose to a 31 month high as it recorded its eighth straight month of expansion.
Fraser Sime, Regional Director, Bank of Scotland said:
“July's survey results signalled the Scottish private sector moving up a gear, as the PMI posted its strongest result in 33 months.
“This good news was fuelled by the service sector returning to meaningful growth, alongside a faster increase in manufacturing output.
“Job creation remained positive, with July marking the fastest expansion in employment in over two-and-a-half years. Employment growth was consistent across the manufacturing and service sectors.”
Commenting on the latest figures, Kenneth Gibson MSP added:
“These results are a further vote of confidence in the Scottish economy, coming on the back of Gross Domestic Product figures that show growth four times that of the UK over the first three months of the year, with unemployment also at a record low of 3.8%.
"The SNP Government continues to work hard to drive down unemployment and grow the economy further, whatever challenges may lie ahead."