The number of people employed in Britain’s factories rose at its fastest rate in almost half a century in the past three months as manufacturers sought to cope with a surge in post-lockdown order books, the CBI has said. The business lobby group said jobs, investment, output, costs and prices were all rising rapidly in the strongest period of growth since the early to mid-1970s. In its latest health check, the CBI said manufacturers expected output to grow at the fastest rate on record in the next three months, following the lifting of all restrictions on activity in England this week. But it warned that industry was also facing acute cost pressures, with many of the 250 firms surveyed reporting a shortage of materials and skilled labour. Together with another employers’ group, Make UK, the CBI called for the government to rethink self-isolation rules that have been preventing companies from working at full capacity. Rain Newton-Smith, the CBI’s chief economist, said: “Record growth in manufacturing output volumes is further evidence that UK industry is reawakening following the economic ravages of the pandemic. Demand is rising rapidly, leading businesses to hire more staff and plan further investment in plant and machinery and training. Encouragingly, manufacturers expect further record output growth in the coming quarter.” The CBI’s industrial trends survey reported new orders rising at their fastest pace since 1974, employment increasing at its most rapid rate since 1973 and cost pressures unseen since 1980. Newton-Smith said staff shortages were biting deeply within manufacturing, with skills in short supply and the number of people isolating climbing steeply. “Businesses have already endured a prolonged period of inhibited demand, so it is vital that government now takes all possible steps to protect this resurgence in activity. “In the short-term, that should mean an immediate rethink on self-isolation rules. A test-and-release system which enables healthy people to return to work would help, as would freeing double-jabbed people from isolation obligations. This would ensure manufacturers can operate at full capacity, and work towards capitalising on a swift recovery.” Make UK, the manufacturers’ body, said its survey showed 77% of companies were being impacted by test and trace, 13% said some production had been stopped, and a quarter said they had up to 10% of staff isolating, with almost one in 10 saying up to 25% were off work. Ben Broadbent, deputy governor at the Bank of England and a member of Threadneedle Street’s monetary policy committee, said on Thursday he expected a recent pick-up in the price of goods to be temporary and wages would provide a better guide to whether action would be needed to rein in inflation. “While we know it’s going to go further over the next few months, I’m not convinced that the current inflation in retail goods prices should in and of itself mean higher inflation 18-24 months ahead, the horizon more relevant for monetary policy,” Broadbent said. “The outlook for aggregate demand growth still matters. And for all the usual reasons and more, the MPC will have to pay very close attention, parsing the official data as best it can, to the numbers in the labour market.” Broadbent is the latest MPC member to give his views about inflation – currently 2.5% – ahead of a meeting of the committee early next month. The Office for National Statistics said its digest of the most recent indicators of the economy showed retail footfall up for the first time since early June, a higher number of job adverts, but credit and debit card payments down. The figures were for the period before this week’s lifting of restrictions in England.