British exporters have moved into top gear making the most of the cheaper pound to fill order books and buck the economic slowdown.
The CBI's Industrial Trends survey for March showed 26 per cent of manufacturers describing order books 'above normal', while 19 per cent were 'below normal'.
The resulting balance of seven per cent is up from three in January and the strongest outcome since November.
With export orders, a more modest positive balance of three per cent has nevertheless not been matched since November, 2006 - and not been bettered since August, 1995.
Makers of capital goods are experiencing a different pattern. They reported the strongest order books for 20 years despite weaker exports.
Industrialists are responding with plans to crank up output. A balance of 18 per cent expect output to rise over three months, more than in any month since June and up from a recent low of three per cent in December.
This success, though, is matched with a determination to force prices higher, at least in the home market. A balance of 25 per cent expect to book home orders at higher prices, in line with a recent high recorded in May's survey, but otherwise more than at any time since 1995.
"Manufacturing is not only holding up as the economy slows, but growing on strong exports," said Ian McCafferty, CBI chief economic adviser. "With the prospects for the domestic market uncertain, it is important firms can continue to attract overseas business which a competitive pound will help enormously."
Sterling has fallen to its lowest on a trade-weighted basis in more than decade this month, making British goods cheaper for overseas buyers.
Howard Archer, UK economist at consultants Global Insight, said the Bank of England would be alarmed at evidence of manufacturers' confidence they can pass on high costs they face from fast-rising oil, energy and commodity prices.
"This highlights the serious inflation pressures constraining the Bank of England's ability to respond to downside growth risks by cutting interest rates aggressively," he said. "While the CBI survey indicates manufacturing activity is currently holding up surprisingly well, the sector nevertheless seems set to be increasingly hit by a damaging mix of slowing domestic and foreign demand over coming months, tighter credit conditions and elevated oil and commodity prices.
"While a recent markedly softer pound offers relief to manufacturers it is unlikely to fully offset these dampening factors."
EEF senior economist, Lee Hopley, confirmed findings manufacturing is holding up, with reasonably strong export growth in key markets including the Middle East and Asia. She warned growth is likely to be slower.
