UK manufacturers' export order books are this month in the best shape since August 1995, according to an upbeat survey of the sector published yesterday by the Confederation of British Industry.

The survey also pointed to growing price pressures, fuelling thoughts that the Bank of England's Monetary Policy Committee might raise UK interest rates again early next year.

Most economists believe rates have peaked at 5per cent, after quarter-point rises in August and this month, but they see a significant risk of further tightening, particularly if wage inflation pressures, which have so far been notable by their absence, appear in the January pay round.

Minutes of the MPC's November 8 and 9 meeting will this morning reveal whether or not all nine committee members supported the quarterpoint rise at this meeting. The speculation has been that David Blanchflower, the USbased economist who opposed August's rise, may have voted against the increase two weeks ago as well.

Subtracting the 24per cent of manufacturers reporting in the CBI survey that export order books were below normal for the time of year from the 26per cent saying they were above, a rounded net 3per cent said they were better than usual.

This was a big turnaround from a net 11per cent reporting they were worse than usual in the previous CBI industrial trends survey a month ago, and the best reading for export order books since August 1995.

A net 6per cent of survey respondents reported overall order books were below normal but this was much better than a balance of 20per cent reporting such a position a month earlier.

The pace of growth of output volumes is expected to slow. A balance of 5per cent predict in the latest survey that output volumes will rise in the coming three months - down from 9per cent a month earlier.

A net 19per cent of manufacturers predicted a rise in the average price at which domestic orders are booked in the next three months - the highest such balance since January 2005.

Howard Archer, at economic consultancy Global Insight, believed the Bank of England would be "alarmed" by this and noted the CBI's finding that manufacturers' expectations of price increases in the consumer goods sector were at their highest since May 1997.

MPC members are concerned that firms may use the fall in oil prices from their summer peaks to rebuild profit margins, thereby fuelling inflation.

Ian McCafferty, CBI chief economic adviser, said: "This month has left many businesses pleasantly surprised. Overseas demand for British-made goods has bounced back and total order books have returned to the levels of the summer. Companies expect to increase prices at a slightly faster rate, to recover some of the margins squeezed by high costs, but they also expect output growth to ease."

However, he was cautious about the outlook because of a slowdown in growth in the eurozone and US - key markets for UK manufacturers.

Paul Dales, at Capital Economics, was also wary.

Referring to the drop in the number of firms expecting a further increase in output volumes, he said: "On the face of it, this balance is consistent with an easing in the annual growth rate of the official manufacturing output data from the current rate of 2per cent to around 0per cent. Our feeling is that it suggests that manufacturing activity is expanding at a reasonable rate, but it is far from booming.

"What's more, with industry likely to be hit hardest by the US slowdown, we doubt that industry will add much to overall GDP (gross domestic product) growth in the coming quarters."