BRITAIN'S manufacturing exports are running at their highest level in two years thanks to the pound's post-referendum slump, but experts warned that currency changes were proving a double-edged sword for the sector.

The CBI Industrial Trends Survey said export orders reached their highest since August 2014, hitting minus 6 this month, up from minus 22 in July.

Total orders came in above expectations, dropping to minus 5 in August, down from minus 4 in July, but above economists' predictions of a fall of minus 10.

The report said the slide in sterling appeared to be fuelling stronger overseas demand, with chemical manufacturers accounting for more than half of the rise in orders.

However, it added price expectations for three months ahead rose to its highest level since February 2015, triggered in part by the rising cost of raw material following the fall in the UK currency.

Anna Leach, CBI head of economic analysis and surveys, said the pound's weakness was helping to boost exports but pushing up costs and prices.

She added: "The most significant effects of the vote to leave the EU will flow over the medium- to long-term.

"Therefore, firms need to see ambitious decisions in the Autumn Statement that will secure the UK's economic future as changes to trade, regulation and access to skills loom on the horizon."

The survey of 505 firms found that average price increases in the three months to November hit plus 8 in August, up from plus 5 in July.

It said manufacturers producing coke and petroleum had the highest expectation of output price inflation for the next three months, while printers and publishers are expecting prices to fall the most.

It added that the measure of output expectations for the three months ahead was plus 11 in August, rising from plus 6 the month before.

Meanwhile, a separate survey suggests that the eurozone economy is still expanding, despite the supposed shock of the UK's recent Brexit vote.

The Purchasing Managers' Index (PMI), compiled each month by the financial information service Markit, says eurozone activity in August was at its highest for seven months.

The index measures the spending intentions of companies in Europe and is widely seen as a good indicator of business activity.

The initial, or "flash", reading for the eurozone PMI in August was 53.3, up from 53.2 in July.

Markit's chief economist, Chris Williamson, said the eurozone economy "remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by Brexit uncertainty".

He said this pointed to the economy of the eurozone expanding by 0.3 per cent in the third quarter of this year.