Manufacturing powers UK rally with leap to 16-year peak

The Chartered Institute of Purchasing and Supply's latest upbeat activity index, where a score over 50 signals growth, hit 58, the best since September 1994. Manufacturers are also taking on staff at the fastest pace since CIPS' survey began in 1992.

Orders from France, Germany, the US and China pushed export orders to a seven-month high but there were also signs of recovering domestic demand with orders overall at their strongest since April, CIPS said.

Markit senior economist Rob Dobson said the figures provided a fillip for efforts to shift UK growth towards exports rather then depending on debt-laden consumers as Britain begins the huge task of slashing the deficit.

"The rebalancing of the economy away from consumption towards exports represents a key part of the coalition's growth strategy, and comes at a time when stronger manufacturing expansion may well be needed to offset a likely slowdown in consumer spending," Dobson said.

Official figures showed manufacturers boosting output by 1% between July and September and today's figures prompted forecasts that the sector could help the UK keep up the momentum over the months ahead.

The overall economy grew 0.8% in the third quarter but the independent Office for Budget Responsibility forecasts this to slow to 0.3% during the first quarter of 2011.

Ernst & Young Item Club economic adviser Andrew Goodwin said: "The manufacturing sector has really roared back to life over the past couple of months. All in all these results bode well for GDP growth around the turn of the year.

"Though the pace of growth may slow a little, given that we cannot rely on construction to keep contributing in the way it has done recently, the recovery appears to have some good momentum behind it."

The strong result cuts the chances of the Bank of England switching on the money-printing presses again with more quantitative easing in the near future.

ING Bank economist James Knightley added: "Fears of a potential "double dip" will continue to fade and so the prospect of further QE next year recedes further."

But while Britain's manufacturers may be roaring ahead, but growth is far more patchy across the rest of Europe, according to financial information firm Markit.

Its eurozone activity index registered a four-month high of 55.3 in November, but the traditional powerhouses of France and Germany accounted for the lion's share of the growth and the pair are pulling away from their weaker rivals.

Markit chief economist Chris Williamson said things were "far less rosy" elsewhere in Europe with struggling Spain's manufacturing sector stagnating over the month and Greece shrinking further. Italy and Austria also saw slowdowns.