Solid upturn in UK manufacturing driven by “substantial increases” in both manufacturing production and new orders, Markit-CIPS PMI survey shows.

Manufacturing returned to form in November as the sector steamed ahead with the fastest growth in nearly three years, following two months in which the pace of expansion slowed.

The reading of 58.4 on the closely-watched CIPS/Markit purchasing managers’ index (PMI) survey – where the 50 mark separates growth from contraction – was the best level since February 2011.

Monday’s figures are further evidence that the recovery is gaining traction, creating the best economic backdrop in three years for the Chancellor when he delivers his 2013 Autumn Statement on Thursday.

The growth in manufacturing included a strong level of export orders – with new work from Asia, the US, Germany, France, Ireland, Belgium and the Middle East – but the domestic market remained the prime factor in order growth.

It was the eighth successive month of growth in manufacturing. The expansion in new orders surpassed a 19-month high seen in August.

The data suggest that manufacturing is on course to beat the 0.9pc growth it notched up in the third quarter, with the pace of growth so far in the final three-month period of the year tracking comfortably above the 1pc mark.

Employment in the sector rose at the fastest pace since May 2011, signalling that companies are creating around 5,000 jobs a month.

Manufacturers’ input costs rose for the fifth month in a row but companies reported some success in alleviating the squeeze by passing these on to clients.

Rob Dobson, senior economist at survey compiler Markit, said: “UK manufacturing continued to hit the high notes in November.

“Manufacturing and the wider economy are on course to build on the third quarter’s solid foundations.”

David Noble, chief executive of the Chartered Institute of Purchasing and Supply, said it was an “all-round glowing performance” for the sector.

“The sector’s solid growth was primarily underpinned by a strong domestic market, boosting new business in the UK and giving manufacturers the confidence to look ahead to the future,” he said.

“This was coupled with new export orders from key overseas markets accelerating at one of the fastest rates since the financial crisis.”

Samuel Tombs, UK economist at Capital Economics, said: “The improvement in the UK CIPS manufacturing survey in November should help to ease concerns that the recovery is entirely founded on an unsustainable housing market boom.”

Howard Archer of IHS Global Insight said that if it is followed by robust PMI data from other sectors this week, it will look very likely that gross domestic product growth for the fourth quarter “could at least match” the 0.8% of the third quarter.

James Knightley of ING Bank backed the view that unemployment would drop below the key threshold of 7% around a year from now – a figure which would prompt the Bank of England to be able to consider lifting interest rates.

[Telegraph]