Furthermore, despite concerns that firms might curb spending ahead of Britain's planned referendum on its European Union membership, the Confederation of British Industry's survey showed the investment intentions of manufacturers were rising.

The CBI's order book balance for manufacturers fell to -15 in January from -7 in December, below a median forecast of -10 in a Reuters poll of economists.

British manufacturing has lagged the recovery in the rest of the country's economy since 2013 and signs of a slowdown in emerging markets are expected to hold the sector back this year.

Nonetheless, expectations for the next three months recovered after being negative for two straight months, hitting a reading of +14 in the survey.

"Over the longer term, strong investment in innovation and skills is vital to boosting our performance in exports, so it's great to see firms planning to invest more in training and products over the next year," Rain Newton-Smith, the CBI's director of economics, said in a statement.

(Writing by William Schomberg, editing by Andy Bruce)