However, rising global prices are increasingly being passed on to consumers, the report revealed.
The survey reported a record strong quarter in the three months to February, with a positive balance of 25 per cent of manufacturers reporting an increase in output.
And confidence is high for the near future, with 28 per cent more respondents expecting output to rise, rather than fall, in the coming 3 months.
“Manufacturers have picked up this year where they left off in 2010, with output growing and little sign that the export-led recovery is about to dry up in the near term,” said EEF economist Lee Hopley.
Strong demand from overseas is driving the sector forward, she said.
Growth in manufacturing activity has held at a record high for the first two months of 2011, a purchasing managers’ survey revealed last week.
However, price pressures continue to burden the industry, EEF found.
“Manufacturers have reached the limit of their ability to absorb further cost increase with a balance of 26 per cent of companies increasing their prices over the past three months,” the report said.