Rob Dobson, senior economist at Markit and author of the Markit/CIPS Manufacturing PMI, said: “Manufacturers made a record breaking start to 2011, confirming that the sector remains one of the brighter spots of the UK economy. New orders and employment both rose at survey record high rates, while output expanded at the fastest pace since the mid-1990’s. Robust demand was supported from both the domestic and overseas markets, suggesting that what we are seeing is not just an export orientated recovery, but there are also signs of life in domestic consumer and business spending.

“Manufacturers are still being buffeted by rising cost pressures, however, with raw material prices rising at the steepest pace since the survey began in 1992. Increasing signs of these costs are being passed down the supply chain in the form of higher factory gate prices.”

David Noble, chief executive officer at the Chartered Institute of Purchasing and Supply: "UK manufacturing steamed ahead in January as the sector continues to expand quicker than even the most optimistic amongst us could have predicted. As well as improved market conditions abroad, demand in the UK market also showed signs of growth. This is the much needed kick start to 2011 everyone in the sector was hoping for, particularly in light of last week’s poor GDP figures.

“The significant increase in purchasing activity shows that manufacturers are feeling confident about the future and ensuring they have sufficient stock to meet increased orders. It’s also apparent that most are looking to build up inventories and make certain that they’re not caught short in the face of raw materials shortages.

“Manufacturers will be watching intently to see how the government and Bank of England move to tackle the issue of rising inflation, and hoping for stimulation to encourage continued growth in a sector which is currently leading the way towards UK recovery. A very different picture from last year."

Commenting on the manufacturing PMI survey, David Kern, chief economist at the British Chambers of Commerce (BCC) said: “These figures are stronger than expected and confirm our assessment that Britain’s economic recovery is likely to continue, despite the disappointing decline in GDP in the fourth quarter of 2010. This new data also supports the BCC’s own quarterly survey published last month, which showed the recovery is still mainly being driven by manufacturing. It is also encouraging to see employment in the manufacturing sector at a record high.

“However, the recovery is fragile, especially as the austerity programme is now being enforced. We believe that the government must persevere with its deficit-cutting plan to stabilise our public finances. But this must be supplemented with policies to support growth, while the MPC should maintain low interest rates for some time.”