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Manufacturing down, but production fuels hope

George Osborne's march of the makers is stuttering but industrial production is still likely to contribute to growth, according to figures released tomorrow.

Manufacturing output contracted by 0.2 per cent in April on the previous month, following gains of 1.1 per cent in March and 0.7 per cent in February. However, overall industrial production grew by 0.1 per cent, the third successive rise, prompting City analysts to hail further evidence of an economic improvement.

"The nascent industrial recovery is for now still under way," said Samuel Tombs of Capital Economics.

Despite the less impressive manufacturing figures, Lee Hopley, of the manufacturers' organisation EEF, said: "We are still looking at a pick-up in activity across UK manufacturing through the second half of this year."

The Markit purchasing managers' survey for manufacturing in May showed overall activity expanding at the fastest rate in over a year.

The overall economy grew by 0.3 per cent in the first quarter of 2013, meaning the UK avoided a return to recession, and surveys covering the services and construction sectors last week pointed to a brightening picture in the second quarter.

The National Institute of Economic and Social Research forecast that the economy grew by 0.6 per cent in the three months ending in May, down from the 1 per cent expansion estimated in the three months to April.