The seasonally adjusted UK Purchasing Managers Index (PMI) has risen to a two-and-a-half year high of 57.2 in August 2013 compared to 54.8 in July.
The growth is primarily due to rise in output and new orders, according to statistics released by research firm Markit and the Chartered Institute of Purchasing & Supply (CIPS).
A measure of manufacturing activities in the country, PMI of above 50 implies that the sector is experiencing growth, and below hints at contraction. Manufacturing activity accounts for about one-tenth of the UK economy.
During the month, manufacturing output grew due to positive contributions from the consumer, intermediate and investment goods sectors, while demand in domestic market contributed in growth of new orders.
In addition, most of the producers launched their new products in August that improved market confidence. Exports also grew due to strong demand from countries like the US, China, mainland Europe, India, Scandinavia, Brazil and Ireland.
However, cost inflationary pressures grew due to increase in price of raw material. Manufacturers reported price rise of commodities, feedstock, oil, paper, polymers and timber.
Average selling prices and buying volumes also grew in August.
UK manufacturers continued hiring new people in production, research, management and support teams in August.
The UK manufacturing sector registered a 0.7 per cent growth in the second quarter of 2013. It is expected that the growth will touch 1 per cent in the third quarter.
Rob Dobson, senior economist at Markit, said: “Orders and output are growing at the fastest rates for almost twenty years, as rising demand from domestic customers is being accompanied by a return to growth of our largest trading partner, the eurozone.
“While the latest PMI suggests that the output side is increasingly positive, the news on the other fronts is much less so.”
David Noble, CEO of CIPS, said: “Manufacturing maintained Q3 momentum to reach a two and a half year high thanks to the biggest jump in output and new orders in almost two decades.
“This boon was driven by strong domestic demand and accelerated growth in export orders; all of which are a sign of growing confidence in the UK economy more broadly.”
Data for the survey was collected from 600 industrial firms between 12 and 27 August 2013.