Employment levels remained steady over the three month period

It said businesses north of the border were much more positive than they were three months ago.

Reasons include a general improvement in orders, with stronger global demand continuing to support manufacturers producing goods for export.

This helped halt a near continuous six-year decline in employment, with staff numbers unchanged for three months.

However, CBI Scotland predicted that job loss announcements were expected to resume during the third quarter.

There is as yet no indication of employment prospects in manufacturing improving in the short term Iain McMillan CBI Scotland director

The quarterly research found that overseas order volumes surged and that export prices had declined at a slower rate.

CBI Scotland director Iain McMillan said: "Scottish manufacturers have benefited from the continuing upturn in the global economy, especially in our key export markets of the US, France and Germany."

But he added: "Home market orders have remained flat and there is as yet no indication of employment prospects in manufacturing improving in the short term."

The CBI's latest Scottish Industrial Trends Survey suggested that 31% of manufacturing businesses were more positive than they were three months ago.

Only 8% were found to be less optimistic about future business prospects.

More firms said that they planned to increase spending on training and re-training.

Lagging behind

The survey said that the upturn began to take hold north of the border during the second quarter of this year.

A recovery in UK manufacturing had been evident since the start of the year, but Scotland had been lagging behind.

Mr McMillan urged the Scottish Executive to do more to help the sector by investing heavily in transport, skills, the planning system and the water and sewerage infrastructure.

An executive spokesman said annual spending on transport was set to break through the �1bn barrier.

"Obviously ministers cannot pre-empt the decisions that will be taken in the forthcoming spending review.