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UK factory activity roars along at start of third quarter

Oli Scarff | Getty Images

British manufacturing grew at its fastest rate in more than two years at the start of the third quarter and looks set to help the recovering economy gain momentum, a survey showed on Thursday.

The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) jumped to 54.6 in July from an upwardly revised 52.9 in June, its fourth straight month of expansion.

The reading was the strongest since March 2011 and beat by a wide margin even the most optimistic forecast in a Reuters poll of economists.

(Read more: Don't panic! UK recovery is 'firmly entrenched')

The latest sign that Britain's economy is edging closer to sustainable growth - termed "escape velocity" by the Bank of England's new governor Mark Carney - will feed into Thursday's discussions at the central bank, which is due to announce its policy decision at 1100 GMT.

Whether it proves lasting or not, British economic growth is accelerating, with the International Monetary Fund predicting a 0.9 percent rise in gross domestic product this year, up from a limp 0.2 percent in 2012.

July's overall expansion in manufacturing, which accounts for a 10th of Britain's GDP, was driven by the fastest rises in new orders and output since February 2011.

The subindex for new orders rose to 58.2 in July from 55.4 in June.

Demand for British wares grew both at home and abroad, including in the euro zone - Britain's main export market.

(Read more: UK economy picked up steam in the second quarter)

In addition, stocks of finished goods shrank at the sharpest rate in more than three years, boding well for production in the coming months, survey compiler Markit said.

"There is also a strong export component in these positive numbers, as UK manufacturers benefited from the sharpest growth in new export orders for two years," said Rob Dobson, senior economist at Markit.

Factories showed more appetite for hiring than at any point in the last two years.

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