Separate figures indicated a big jump in house prices last month. Halifax Building Society reported that a 1 per cent increase during the month had raised the annual rate of house price inflation to 7.2 per cent.
The pace of growth in manufacturing was weaker in March than the previous month, according to the purchasing managers' index, mainly because of a fall in manufacturing employment. Output rose at a somewhat slower pace than in February, but total orders picked up more rapidly despite weaker growth in export orders.
Peter Thomson, director general of the Chartered Institute of Purchasing and Supply, said: "It's heartening that despite the strength of the pound, order books are still growing."
But a survey by the Engineering Employers Federation reported that its heavily export-dependent members were suffering from the effects of the strong pound. Despite a pick-up in continental markets, engineers' export orders fell sharply during the latest three months.
Economists said yesterday's survey results would make no difference to the interest rate debate. "The purchasing managers' index has stayed in the same range for six months. I'm of the view that interest rates do not need to go up, and this hasn't changed my mind," said Simon Briscoe at Nikko Europe.
The majority view in the City is that interest rates will need to rise, but this is due to rapid growth in the service industries rather than manufacturing. A new purchasing managers' survey for services, due to be published tomorrow, will attract more attention.
"Figures for service sector activity generally are much stronger," said Michael Saunders at Salomon Brothers, predicting a half or three-quarter point rise in base rates shortly after the election.
Yesterday's house price figures confirmed the picture of a buoyant consumer economy, although Halifax cautioned that prices were fluctuating from month to month.
The recovery was "still only at a modest pace, with no indication of the boom conditions of the late Eighties" it said.
Yesterday's manufacturing activity index fell slightly from 53.4 in February to 52.9 last month, remaining well above the dividing line of 50 between expansion and recession.
There was a strong rise in output, although again slightly less than February's. Stocks of finished goods fell thanks to sales in excess of output, but new orders climbed at a faster pace than the previous month.