A key manufacturing survey rose to its highest level in over 15 years last month, and banks said they planned to step up corporate lending, in signs on Thursday that the recovery is gaining strength.

However, the improvement is likely to take longer to filter through to households. The CIPS/Markit PMI purchasing managers' survey reported a small fall in factory employment, and a separate study showing less generous collective pay deals.

The main news in support of recovery on Thursday was a rise in the headline manufacturing PMI index to 57.2 from 56.5, a bigger jump than economists had forecast and the index's highest level since October 1994, when the economy was also emerging from recession.

With some caveats, economists treat the PMI and its output component as a proxy for growth in factory production, and Capital Economics estimated that it pointed to a quarterly rise in manufacturing output of just under 2 percent, almost double the 1.0 percent growth shown in official data for January.

"The report suggests that the industrial recovery is continuing to pick up pace nicely," said Capital Economics' Vicky Redwood.

However, she added that recent growth estimates based on the PMI had proven to be over-optimistic, and noted that new orders growth had slowed modestly.

The PMI output component rose to 61.9 in March from 59.8, its highest since July 1994. Although new order growth slipped fractionally in February, it remained close to January's six-year high due to new product launches and the start made by some firms in rebuilding depleted inventories.

Export order growth fell more markedly from February& apos;s series high, but businesses still reported a benefit from sterling's weakness versus other major currencies.

PRESSURE ON JOBS, WAGES

The message from the PMI survey on jobs was less upbeat. While most firms were holding employment levels steady, 15 percent reported job cuts, due to cost-cutting and redundancies, and it is almost two years since there was net hiring.

This pressure was reflected in a study of 94 pay settlements covering almost 300,000 employees from Incomes and Data Services, part of Thomson Reuters, which showed wage growth slowing to 1.8 percent in the three months to February from 2.0 percent in the previous three-month period.

Nonetheless, within that manufacturing pay deals outpaced those in the service sector, growing by 2 percent compared to 1 percent for those in private-sector services jobs.

The PMI survey also showed that input prices rose at their fastest pace since September 2008, due to higher import costs from sterling weakness and generally higher prices for food, fuel, chemicals, metals, timber and utilities.

Output prices rose at their fastest pace since October 2008, with firms saying they were wanted to protect margins by raising the prices they charged amid improving market demand.

The Bank of England had good news for firms looking to invest, with the net percentage balance of lenders seeing an increase in credit over the next three months rising to +22.7 percent from +20.5 percent in the first quarter.

The main drivers for this improvement were the outlook for the economy as a whole and specific sectors, the central bank said in its quarterly credit conditions report.

However, Capital Economics' Redwood worried that these credit lines could prove fragile if the outlook darkened.

"The positive tone of the survey in the past few months has not resulted in much of a pick-up in net lending growth," she said. "We continue to expect the weakness of bank lending to be a key factor preventing the recovery from gaining much more momentum."

Lenders also said that they expected the supply of unsecured credit -- for example, via credit cards -- to increase in the coming quarter, while the availability of secured lending such as mortgages would remain unchanged.

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(Additional reporting by Kylie MacLellan and Christina Fincher, editing by Stephen Nisbet)