By Wiktor Szary 

LONDON--British manufacturers expect a rapid increase in output over the next three months, an industry survey showed Thursday, as the pound's significant depreciation caused by the country's vote to leave the European Union continues to support overseas demand.

Separately, the Bank of England said the outlook for the stability of the financial system in the U.K. is "challenging," citing concerns stemming from the June vote and volatile financial markets.

Economists continue to scour for signs of the impact Britain's decision to leave the EU is having on the country's economy. Earlier this week, the country's statistics office said that despite some initial surveys in the immediate aftermath suggesting a sharp deterioration in consumer and business confidence there so far has been "no sign of a major collapse in confidence and, within the data that is available, some indicators of strength."

But economists caution that the longer-term effect remains to be seen and many expect growth to slow. The Bank of England has said it anticipates the economy will slow in the second half of 2016 and into 2017 as uncertainty triggered by the referendum result weighs on spending and investment.

The Confederation of British Industry, an employers' lobby group, on Thursday said its monthly survey of sentiment in the manufacturing sector showed that the output expectations balance rose steeply to plus 22 in September, from plus 11 in August. The balance reflects the percentage of respondents expecting an improvement against those predicting a decline. Sentiment in September remained slightly below the pre-referendum level, however.

The rise from the previous month was partly a result of the weakened sterling, which has boosted exports demand, the CBI said. The pound has fallen by some 10% against the dollar since the morning of the referendum result.

However, the CBI also warned that manufacturers will face "plenty of challenges ahead," as the U.K. adjusts to a new relationship with the EU and the rest of the world.

Following a quarterly meeting on Sept. 20, the BOE's Financial Policy Committee, which monitors the country's financial stability, on Thursday highlighted two specific risks relating to the result of the June vote.

One is a sharp fall in prices and transactions in the commercial real-estate market, which could hurt lenders, and the second is the risk that foreign investors turn sour on the U.K., undermining the nation's ability to easily finance the gap between what the nation spends at home and earns from abroad.

The FPC also flagged risks to the U.K. financial system from abroad. It cited economic and political uncertainty across the globe and struggling banks in parts of Europe. Officials also said they're concerned about high prices and volatility in bond markets.

Write to Wiktor Szary at Wiktor.Szary@wsj.com

(END) Dow Jones Newswires

September 22, 2016 08:57 ET (12:57 GMT)