THE MANUFACTURING industry grew at the fastest rate in eight months in March, bolstered by strong domestic demand and a pick-up in export orders, a survey showed.

The purchasing managers index, compiled by data firm Markit, hit an eight-month high in March, climbing to 54.4 from 54 in February. The main reading was in line with expectations, but new orders surged from 56.4 to 57.9.

This could help offset weakness in the dominant services sector, which shrank by 0.2 percent on the month in January and threatens to drag down first-quarter gross domestic product figures due out the week before the General Election.

While the domestic market remained the main source of new contracts, there was also good news for exporters, which saw overseas demand grow after a small dip in February. The surge will help to soothe worries about the impact that the exchange rate is having on UK factories. The pound has recently strengthened against the euro, potentially damaging exports to Britain’s largest trading partner.

Liz Mayes, North East Region Director at EEF, the manufacturers’ organisation, said: “Coming on the back of official data confirming a very healthy rate of manufacturing growth last year, the PMI suggests that, if anything, the sector has stepped up a gear at the start of this year. While the story of healthy domestic demand has become familiar over the past year or so, evidence is also mounting that the sector’s export prospects are finally turning a corner with demand improving across a range of markets.

“Undoubtedly the pick-up in new business will have been aided by strengthening activity in much of the Eurozone. With the employment outlook remaining positive and other data confirming a solid performance for productivity and investment growth in 2014, manufacturing continues to look well placed to support economic growth in the year ahead.”