UK manufacturing grows modestly in Jan, output rises strongly: Markit PMI

"A small gain in employment suggests that firms are less focused on cost reduction amid signs of improved order books, which should lead to further production growth in February," Dobson said.

"Sterling's weakness, plus indications of firmer demand in key export markets such as the euro zone, notably Germany, and emerging markets such as China should also help lift sales in coming months," he added.

For now, companies said weak demand from continental Europe was behind the 13th consecutive drop in new export orders.

Solid input price inflation continued to eat into manufacturers' profit margins, as the prices they charged rose by a smaller margin. Firms reported higher costs of chemicals, energy, food products, metals, packaging and plastics.