The Confederation of British Industry (CBI) has said that the manufacturing sector is enjoying the longest run of sustained demand for 12 years and is bucking the slowdown in other parts of the economy.
The CBI, in its monthly Industrial Trends Survey, also warned however that firms were expected to continue to raise prices significantly over the next few months.
The CBI's survey found that three per cent of firms had total order books which were above normal. According to the CBI, January was the tenth time in 12 months that order books were so healthy, and it was its strongest since 1995.
According to the CBI the strength of manufacturing goods was driven by higher demand for capital goods. The CBI said that order books in this sector had only been this strong once, in August 2007.
The survey also found that eight per cent of firms said that orders were below normal in export demand.
Consequently firms are expecting their output to grow in the next three months, although at rates slightly lower than in the first half of 2007.
The CBI said that 22 per cent of firms said they expected their domestic prices to rise in the next three months, most notably among food and metal products manufacturers.
Ian McCafferty, CBI chief economic adviser, said: It is encouraging to see that the slowdown already in train in some sectors of the economy has not yet hit manufacturers.
While manufacturing is not going to be immune to weaker demand at home and abroad, the recent depreciation in sterling will be a helpful boost for exporters over coming months.
A resilient, export-orientated manufacturing sector is exactly what we need as we enter a tricky period of rebalancing the economy away from its dependence on domestic demand.