The PMI rose to a 30-month high of 56.1 in December - up from 53.6 in November – remaining well above the long run average of 51.5.
It marks the fifth successive month of growth in the sector as it steadies following June’s EU referendum.
Markit said that rates of growth for production and new orders in the final month of 2016 were among the best seen in the past two-and-a-half years.
It also found companies benefitted from stronger inflows of new work from both domestic and overseas demand, with the latter helped by the boost to competitiveness from the weak sterling exchange rate.
Meanwhile price pressures remained elevated but eased from recent highs, the survey found.
“The UK manufacturing sector starts 2017 on a strong footing,” said Rob Dobson, senior economist at Markit. “The headline PMI hit a two-and-a-half year high in December, with rates of expansion in output and new orders among the fastest seen during the survey’s 25-year history.
“Based on its historical relationship against official manufacturing output data, the survey is signalling a quarterly pace of growth approaching 1.5%, a surprisingly robust pace given the lacklustre start to the year and the uncertainty surrounding the EU referendum.”
Mike Rigby, head of manufacturing at Barclays, added: “As resilient as the sector has proved to be over the years, weaker sterling is making imports more expensive, feeding inflationary pressures which will inevitably impact domestic output.
“To keep the momentum going, what we need to see now is manufacturers realising more of the investment decisions that were put on hold in 2016.”
