The latest Confederation of British Industry (CBI) monthly Industrial Trends Survey shows a significant rise in production levels for the three months to August, alongside markedly improved order books.
The survey of over 400 manufacturers found that total orders and export order books increased sharply, with total orders at their highest since August 2011.
Output volume growth met expectations with a 16% rise. A total of 37% of firms stating volume of output had gone up in the three months up to August, with 21% reporting a drop.
In the coming three months output figures are expected to increase at a rate of 25% which would see output at its highest level since March 2011.
The CBI has subsequently raised its forecast for UK economic growth this year to 1.2% – double the pace predicted by chancellor George Osborne in the Budget.
“The economy has started to gain momentum and confidence is picking up, but it’s still early days,” said John Cridland, CBI director-general. “We need to see a full-blown rebalancing of our economy, with stronger business investment and trade before we can call a sustainable recovery.”