The survey, published yesterday by the Chartered Institute of Purchasing and Supply, will reinforce hopes that the UK economy can achieve further significant growth in the third quarter.
Bank of England Governor Mark Carney last week highlighted the fact that UK economic output was about 3% adrift of its peak ahead of the Great Recession of 2008/09, a poor performance relative to that of other major economies such as Germany and the US.
CIPS's headline purchasing managers' index for UK manufacturing, a composite measure of activity which includes output, new orders, employment, suppliers' delivery times and stocks of goods purchased, rose from 54.8 in July to 57.2 in August on a seasonally adjusted basis. The August reading signals the fastest pace of increase in this overall measure of activity for two-and-a-half years, and is well above the level of 50 which is calculated to separate expansion from contraction.
CIPS's output index for manufacturing jumped from 58.3 in July to 62.4 in August. The August reading indicates the fastest monthly pace of UK manufacturing output growth since July 1994, and CIPS cited marked expansion across the consumer, intermediate, and investment goods sub-sectors.
The survey also showed the fastest monthly growth of new orders for UK manufacturers since August 1994. In spite of the surge in output and new orders, the survey showed the pace of increase in the UK manufacturing sector workforce eased slightly. It remains significantly adrift of the monthly rates of growth in late 2010 and early 2011.
CIPS highlighted particularly strong growth in output of the chemicals and plastics, electrical, and food and drink manufacturing sub-sectors in August.
It said higher levels of output were linked to improved inflows of new business from both domestic and overseas clients.
The pace of increase in export orders picked up marginally in August, according to CIPS's survey, to its fastest pace since July 2011. This marginal acceleration on the export front contrasts with the very sharp pick-up in the pace of overall new order growth, and signals that higher output is being driven mainly by improved domestic demand.
Samuel Tombs, UK economist at consultancy Capital Economics, said: "For now at least, the manufacturing sector appears to be enjoying a healthy bounce-back. And, with manufacturing output still some 10% below its pre-recession peak, there is clearly potential for a period of strong catch-up growth ahead."
However, he added: "We are concerned that the sector's recovery is susceptible to renewed weakness. For a start, the revival so far has been very dependent on stronger domestic demand, particularly from households.
"In contrast, the CIPS survey's export orders balance has barely risen over the past few months. A durable recovery will require a much broader revival in demand."
Rob Dobson, senior economist at CIPS survey compiler Markit, said: "Orders and output are growing at the fastest rates for almost 20 years, as rising demand from domestic customers is being accompanied by a return to growth of our largest trading partner, the eurozone. The sector therefore continues to build on the solid 0.7% expansion registered during the second quarter, and growth could easily break the 1% mark in the third quarter."
He added: "Manufacturing is clearly making a strong positive contribution to the economy, providing welcome evidence that the long-awaited rebalancing of the economy towards manufacturing and exports is at last starting to take place now that our export markets are recovering."
David Noble, chief executive officer at CIPS, attributed the "muted" employment growth to attempts by firms to "maximise staff capacity" before recruiting.