HARD-hit manufacturers saw output rise for the first time in two years in the three months to January as overseas trade threw the sector a lifeline, the CBI business group said today.

Its industrial trends survey for January showed an 11 per cent balance of firms saw higher volumes in the quarter - higher than expected and the strongest figure since January 2007. The measure was last positive in January 2008.

Ian McCafferty, CBI chief economic adviser, said: "After nearly two full years of falling output, manufacturers are seeing a return to modest growth, thanks in part to improved overseas demand and much lower stock reductions.

"It is encouraging that the weaker pound is now providing firms with some respite as global demand improves."

Exports are rising for the first time in two years, with the first quarterly increase since January 2008.

A balance of six per cent of firms said exports grew in the period and the measure is expected to increase more strongly in the future.

Firms are the most optimistic about export prospects for the coming year than at any time since July 1995.

Mr McCafferty added: "Exports are rising for the first time in two years, as UK-made goods are looking more attractive in overseas markets."

However, he said the manufacturing sector is not out of the woods as domestic demand is still weak and access to credit remains constrained for some firms.