The pick-up in manufacturing growth and upward revisions to output levels in earlier months mean the Bank of England will continue to press its case for a rise in base rates, according to City analysts.
''Economic growth remains respectable, and the interest rate argument is not over,'' Kevin Darlington, an economist at the City brokers ABN- Amro, said.
Government statisticians revised up figures for output in April and May, and said the changes could be big enough to affect their next estimate of gross domestic product in April to June. The initial GDP estimate showed growth slowing slightly between the first and second quarters. The next is due in two weeks.
Combined with widespread expectations that German interest rates are heading lower, yesterday's figures helped sterling. Its index against other currencies closed up 0.2 at 83.7.
However, the Central Statistical Office said some of the increased output was adding to stocks, which also looked like being higher than the initial estimate in the second quarter. If so, that might point to a future rundown in stocks - a danger the Bank of England conceded in its recent Inflation Report.
Analysts thought Kenneth Clarke, Chancellor of the Exchequer, would embrace this interpretation. Alex Garrard of UBS said the figures maintained the case against an increase in interest rates.
Total industrial production fell in June due to maintenance of oil fields. The 6.7 per cent drop in oil production, not unusual during the summer, is expected to be reversed when the fields come back on stream.
Manufacturing output rose by 0.2 per cent to the highest level since May 1990. Year-on-year growth increased to 2.3 per cent.