Parts of the sector have shown 73 per cent fewer signs of distress – such as county court judgments and late filing of accounts – at the start of 2012 compared with the same period last year.

Financial experts Begbies Traynor’s quarterly “Red Flag Alert”, which monitors the warning signs of distress in companies, said indications of financial problems fell by 17 per cent across all sectors in the first three months of this year compared with the first quarter of 2011, and manufacturers were the “star” performers.

Print and packaging firms saw 73 per cent fewer instances of distress; food and beverage producers’ distress fell by 37 per cent over the period; while other manufacturing businesses saw warning signs of insolvency fall by 49 per cent.

Julie Palmer, partner at Begbies Traynor, said: “Manufacturing is the star of the economy at present and the engine that could drive a recovery.”

The Bank of England’s regional agents have also spotted the improving health of manufacturers, pointing to a “modest increase” in output thanks to export growth and “repatriation” of production.