British manufacturers are defying Brexit doom by posting one of the biggest growth results in three years in a 'clear sign of confidence is returning'.

The fall in the pound since the EU Referendum result last year has led to an increase in orders at home and abroad, according to industry indicators.

Demand for British goods from foreign buyers at one of its strongest levels since data collecting began in 1996, hitting a record high in July.

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British manufacturers are defying Brexit doom by posting one of the biggest growth results in three years in a 'clear sign of confidence is returning' (stock image)

According to the study carried out by the purchasing managers' index (PMI), securing more business deals overseas has helped support the fastest jobs growth since 2014.

Edward Hardy, an economist at the currency firm World First, told The Times: 'The figures are a clear sign that confidence is returning to the industry after years in the doldrums.

'This goes to show that despite parliamentary gridlock, pessimistic politicians and volatile financial markets, trade opportunities are still out there.'

WHAT IS A PMI READING? The Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Advertisement

The PMI showed a reading of 56.9 last month, up from 55.3 in July and one of the strongest readings since 2014.

A reading above 50 indicates growth; anything below is a sign that the sector is shrinking.

The pound jumped on the news, rising to its highest level against the dollar in more than three weeks, nearly passing $1.30, and rising 0.5 per cent against the euro to €1.09.

The pound has fallen by 13 per cent against a basket of currencies since the Brexit vote, which has proved a boost for manufacturers as it makes UK goods more attractive to overseas buyers.

European Union chief Brexit negotiator Michel Barnier, right, with British Secretary of State for Exiting the European Union David Davis

The manufacturing sector makes up about 10 per cent of the UK economy, but there are hopes it will play a more important role in economic growth at a time when consumer spending is slowing because of rising prices.

A downside to the weakness of the pound has been the rising cost of raw materials from overseas. About 30 per cent of companies reported an increase in prices.

Yesterday Liam Fox warned Brussels must not be allowed to 'blackmail' Britain by demanding the Brexit divorce bill is settled before trade talks can start.

The International Trade Secretary warned EU leaders they face a backlash from businesses across the continent if they continue to block discussions.

But in a sign talks are descending into open warfare, Guy Verhofstadt, the European Parliament's Brexit negotiator, said the EU spent years bending over backwards to accommodate Britain.

The angry comments come after the latest round of Brexit talks ended on Thursday in deadlock over the divorce bill.

It emerged that Brussels wants Britain to pour billions of pounds into the EU foreign aid programmes even after we leave.