A survey 397 manufacturers found growth in the sector accelerating in the three months to November, according to the latest monthly CBI Industrial Trends Survey.
Total orders were, by a small margin, the strongest since August 1988, while export order books were the joint highest in more than 20 years.
The improvement in total order books was particularly marked in food & drink and chemicals, while export order books strengthened notably in chemicals, electronics and transport goods.
Output is expected to continue expanding in the three months to February, although at a more moderate pace.
The level of stocks was below the long-run average and expectations for price inflation were around average, which is similar to recent months.
Anna Leach, CBI head of economic intelligence, said: “UK manufacturers are once more performing strongly as global growth and the lower level of sterling continue to support demand. Output growth has picked up again, and export order books match the highest in more than 20 years.
“Nonetheless, uncertainty continues to hold back investment and cost pressures remain strong. Manufacturers will be hoping the Budget brings some relief from the business rates burden in particular.”
28 per cent of manufacturers reported total order books to be above normal, and 11 per cent said they were below normal, giving a balance of +17 per cent
26 per cent of firms said their export order books were above normal, and 6 per cent said they were below normal, giving a rounded balance of +20 per cent well above the long-run average of -18 per cent (matched the previous series high in June 1995).
40 per cent of businesses said the volume of output over the past three months was up, and 12 per cent said it was down, giving a balance of 28 per cent above the long-run average of +4 per cent
Manufacturers expect output to growth to accelerate in the coming quarter, with 27 per cent predicting volumes to increase, and 14 per cent expecting a decline, giving a rounded balance of +13 per cent
19 per cent of companies expect average selling prices to increase in the coming three months, with only 2 per cent predicting a decline, giving a balance of +17 per cent – significantly above the long-run average of +2 per cent
12 per cent of firms said their present stocks of finished goods are more than adequate, whilst 10 per cent said they were less than adequate, giving a balance of +2 per cent – below the long-run average (+13 per cent)