Britain’s manufacturing sector expanded unexpectedly last month and at the fastest rate in two years as the weak pound made exports cheaper and imports more expensive, according to new data.

Barely a month after Mervyn King, the Governor of the Bank of England, said that weak sterling “will be helpful” in rebalancing Britain’s economy, the latest Purchasing Managers’ Index showed that the UK’s manufacturing sector grew at the third-fastest rate since the series began in January 1992.

The figures were matched by similarly impressive numbers from Europe and the United States that helped to lift the FTSE 100, which closed 51.70 points higher at 5,096.25.

The CIPS/Markit survey of purchasing in the UK manufacturing sector jumped to 53.7 in October, the highest reading since November 2007, from a revised 49.9 the previous month, raising hopes that Britain should emerge from recession this quarter. The consensus forecast had been for an index reading of 50, which would have indicated that the manufacturing sector was flat for the period.

Britain, in recession since the third quarter of 2008, recorded a 0.4 per cent decline in gross domestic product in the third quarter this year, while economies such as Germany, France and America have returned to growth.

Hetal Mehta, senior economic adviser to the Ernst & Young ITEM club, said: “The manufacturing index has jumped a fair bit, which is good news. The weakness of sterling is the main thing driving it.” The pound has fallen by about a quarter against other leading currencies over the past two years.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “At last, some really good news on the UK economy, with data, for once, substantially surprising on the up side. It markedly boosts hopes that the economy will finally return to growth in the fourth quarter.”

British manufacturing also benefited as companies began to restock after months of running down inventories. That trend looks set to continue, with new orders rising to a near-six-year high in October.

Despite the upbeat manufacturing figures, most economists expect the Bank of England to expand its programme of quantitative easing — which seeks to stimulate the economy by printing money — at its monthly interest-rate meeting, which concludes on Thursday. Analysts are split over whether the £175 billion quantitative easing programme will be expanded by £25 billion or £50 billion, although they appear to have a slight bias towards the lower figure.

Britain’s manufacturing figures were published on the same day as it was confirmed that eurozone manufacturing had expanded for the first time in 17 months in October.

The Markit Eurozone Manufacturing Purchasing Managers’ Index for October confirmed its initial estimate of 50.7, up from 49.3 in September.

Meanwhile, the latest factory index for the US from the Institute for Supply Management rose to a reading of 55.7, better than expected and its best for three years, from 52.6 in September, helped by Washington’s “cash for clunkers” car programme.

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