A growing number of manufacturers are enjoying “buoyant” trading conditions following rising demand in overseas and UK markets, according to a new study today.

The Engineering Employers Federation said a survey of almost 550 firms showed that the recovery from recession had gathered pace in the last few months.

The study also suggested that the manufacturing recovery was set to continue over the summer, although the EEF said a package of tax reforms in the Budget later this month would alleviate the concerns of industry.

Martin Wassell, Region director of EEF Midlands Region, said: “We are now seeing a broad based strong recovery which has to be good news for hopes of an export led rebalancing of the economy. Manufacturers are now delivering on their promise that given the right conditions they will deliver.

“They will now be looking to the forthcoming budget to ensure its tax and spending plans do not threaten to derail this optimistic picture. Growth has to be a central part of plans to reduce the deficit.”

Tom Lawton, head of manufacturing at BDO, which helped with the research, added: “These are a good set of results, especially as the manufacturing sector is still getting to grips with the uncertainty of the new coalition government.”

The report showed that over the last three months both output and new order balances were at record levels, while more firms had recruited staff.

Investment intentions remained “flat”, held back by uncertainty over domestic demand and future tax changes as well as lack of finance.

The EEF forecast a 3.5% growth in manufacturing this year and next as output recovers from the depths of the recession.

Over the last three months both output and new order balances were at record levels of +30% and +34% respectively (up from 8% and 2% in Q1.)