Manufacturing exports, boosted by the weak pound, grew at their fastest pace in more than two years over the past three months, a new report shows.
The latest Confederation of British Industry (CBI) industrial trends survey showed that manufacturing output grew at a "healthy pace" while demand expanded in the three months to October.
The survey explained that sterling weakness played its part in boosting exports.
"Respondents who experienced greater overseas appetite for their goods attributed it to the depreciation of sterling," the CBI said.
It added: "Firms' perception of their competitiveness within the EU climbed to an all-time high and competitiveness in countries outside the bloc improved at its fastest since April 2009."
Sterling has fallen nearly 20% against the dollar since the referendum vote, raising hopes that cheaper UK goods would be more competitive on the global market.
"Still, the pound's weakness came as a mixed blessing as average unit costs climbed at the fastest pace in three-and-a-half years," the survey said.
"Accordingly, there are signs that this may be passed on through higher prices: manufacturers' expectations for domestic price inflation rose to the highest since April 2014."
But the survey, which polled 459 manufacturers, showed that the demand outlook for the next three months was "generally positive."
New orders are expected to rise to a balance of 12% over the next three months, with foreign demand the main driver of growth.
It comes after the export order balance rose to 8% in the three months to October, marking the highest balance since April 2014 when it reached 16%.
CBI chief economist Rain Newton-Smith said: "Manufacturers are optimistic about export prospects and export orders are growing following the fall in sterling
"However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead."
The pound was trading around 1.14 against the euro and 1.28 versus the US dollar when the survey was conducted, but has fallen even further in recent weeks. Sterling is now worth around 1.12 euro and 1.22 US dollars.
Looming costs as a result of a weaker pound have not dampened business investment plans.
Manufacturers' investment intentions rose to a balance of 23% compared with the previous 12 months, with spending on product and process innovation, as well as workforce training, on the rise.
But while investment on employee training rose, jobs were slashed. In the past three months the number of jobs in the manufacturing sector dropped to the lowest level since April 2010.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the survey paints a "mixed picture."
He said: "Although optimism has recovered to pre-referendum levels, manufacturers have cut employment over the last three months for the first time since 2010, and plan to cut jobs at a faster rate over the next three months.
"The balance of firms intending to increase plant investment improved only to zero, from minus 5 in Q3, and so remained well below the plus 17 balance before the referendum.
"In short, manufacturers largely are treading water, as weakness in domestic demand offsets to the boost from the lower pound."
Going forward, Mr Newton-Smith said manufacturers would be watching Brexit negotiations closely for signs that trade or access to labour pools might be disrupted, which could cause further pain for the sector.
"Access to skills clearly remains a high priority, so manufacturers will be looking to the Government to implement a new migration system that meets the needs of business while responding to clearly stated public concerns."
He added: "Maintaining a preferential route between the UK and the EU, our largest trading partner, will be important."