Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about 10 percent of the economy, rose to 52.2 from 50.5 in July, its highest print since August 2008.
All the three monitored sub-sectors posted substantial recoveries, with capital goods outperforming its consumer and intermediate goods counterparts in terms of production growth rates, the survey said.
According to the Markit survey, production rose at its sharpest rate in seven months as new orders surged.
The domestic market was the prime source of new contract wins, while the trend in new export business also remained robust.
The job market saw its thirteenth straight month of growth, with August marking the quickest rate of increase since June 2014.
United Kingdom manufacturing activity surprised to the upside in August as business confidence picked up. Following the GST launch, new orders and output dropped for the first time since the downturn in December past year post demonetisation.
Purchase price inflation accelerated for the first time in seven months in August.
China's factories have continued their rebound, with activity expanding at a faster than expected pace while new orders have hit a three-year high.
Output in Britain's manufacturing industry unexpectedly pushed to a four-month high in August thanks to a jump in new work. "The drop in the output index indicates that manufacturing could act as a drag on the economy in the third quarter, with exports dampening order book growth".
Input prices had risen at the fastest pace since March because of supplier shortages and transportation problems, the release said.
"The key question is whether this positive start to the second half of the year can be sustained".
Prime Minister Narendra Modi's shock move last November to scrap high-value banknotes late a year ago has continued to weigh on overall economic activity.