Manufacturing output rises by 3.2%

The recovery has been offered "genuine hope" as official figures revealed the strongest monthly rise in manufacturing output for 10 years.

Manufacturing output grew by 3.2% in July, the Office for National Statistics (ONS) said, while the wider index of production grew by 2.9%.

The largest contributions to the month-on-month rise in manufacturing output came from the manufacture of basic metals and metal products, which rose by 6.2%, followed by the manufacture of transport equipment, which rose by 6.3%, the ONS added.

Howard Archer, chief UK and European economist at IHS Global Insight, said the sharp rebound provided a "significant lift" to growth prospects in the third quarter, after three quarters of contracting gross domestic product (GDP).

Within the index of production, the mining and quarrying sector rose by 4.9% and the water and waste management sector rose by 1.6%.

These increases were slightly offset by the electricity, gas, steam and air conditioning sector, which fell by 0.2%, the ONS added.

The previous month's production figures suffered from the double whammy of an extra bank holiday for the Queen's Diamond Jubilee holiday and from the typical late May bank holiday being moved into June. Accordingly, industrial production output slid by 2.4% between May and June.

Victoria Clarke, economist at Investec, said: "The strength of the July rebound is likely to quell some of those nerves that the UK industrial sector could weigh heavily on third-quarter GDP, limiting any post-Jubilee rebound in overall economic output."

A purchasing managers survey for August also revealed signs of an improving performance in the manufacturing sector.

The economy shrank 0.5% between April and June, for the third consecutive quarter, confirming the double-dip recession as the longest since the 1950s.