Scotland's economy is beginning to stabilise but industry issues across the Eurozone have led to growth being slower over the last three months, compared with the previous period.
The Scottish Chambers of Commerce's (SCC) quarterly business survey found firms were still performing strongly, and sporting events, such as the Commonwealth Games and the Ryder Cup at Gleneagles, boosted tourism performance.
However, the SCC warned that it would be hard to replicate the economic boost towards the end of the year.
"The construction sector and manufacturing sectors are still performing well but face ongoing challenges as both sectors experienced lower sales growth compared with the previous high performing quarter," said SCC chief executive Liz Cameron.
"Businesses have indicated that employment trends remain promising and are expected to grow, as more firms report increased levels of hiring.
"In particular, the retail sector reported its highest increase in employment for 10 years.
"As business looks to hire more people, continued challenges exist, as key sectors are often unable to find the right talent to employ, potentially slowing down the pace of economic growth."
The SCC surveyed more than 420 firms across five major sectors - construction, financial and business services, manufacturing, retail and wholesale and tourism.
While tourism got a boost, a majority of firms within the retail and wholesale sector reported a fall in sales revenue.
Meanwhile, the construction industry reported recruitment difficulties with over 50% of companies saying they had trouble filling roles.