British manufacturing activity expanded at its fastest pace for 15 years in January, according to a key survey, raising hopes that the country's sluggish recovery is gaining momentum.

The CIPS/Markit manufacturing purchasing managers’ index jumped to 56.7 last month from 54.6 in December, a figure which itself has been revised upwards The closely-watched index is now the highest since October 1994 and well above analysts’ forecasts of a 54.0 reading.

The improvement was helped by new orders rising at their fastest pace in six years — driven partly by stronger domestic demand but mainly by a surge in exports — and output growth hit a peak last reached in June 2006.

Economists have been worried about the strength of the recovery after official figures last week showed Britain only just scraped out of recession in the last quarter of 2009, with a growth in GDP of an anaemic 0.1 per cent.

Hopes that recovery is gaining momentum

But today Rob Dobson, senior economist at Markit, which helped compile the survey, said: "The survey raises hopes that the sluggish recovery from recession signalled by GDP data in the final quarter of last year will have gained momentum as we move into 2010.”

He added: "The main driver of growth was a surge in new export orders, as improving global market conditions and the ongoing weakness of sterling led to the sharpest rise in foreign demand recorded in at least 14 years."

There was also some positive data on jobs in the survey, with the numbers employed in the sector rising slightly for the first time in 21 months. CIPS said: "A number of companies reported that it had been necessary to raise capacity in order to satisfy current demand requirements. However, there was still mention of ongoing redundancy programmes in certain parts of the manufacturing sector, particularly the basic metals and mechanical engineering sub-industries."

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, (CIPS) said: “It is ... encouraging to see such strong growth and it suggests we are coming out of recession much quicker than previously feared."