Manufacturing boost to economy

Hopes that Britain will avoid a triple-dip recession have been boosted by figures showing that output from the manufacturing sector rose last month at its fastest pace since September 2011.

The latest Markit/CIPS purchasing managers' index (PMI) showed overall activity expanded thanks to the rise in output, with a headline reading of 50.8 in January - above the 50 level that separates growth from contraction for the second month in a row.

While this was down on the 51.2 reading in December, it came despite last month's snow and adverse weather, which many had feared would impact on manufacturers badly.

The sector was a significant drag on the wider economy at the end of last year, contributing to the worse-than-expected 0.3% decline in gross domestic product (GDP) in the fourth quarter of 2012.

Last week's GDP blow has raised fears that the UK is heading for an unprecedented triple-dip recession .

The economy would have to contract again this quarter to be back in recession, and there has been little optimism following the snow-hit start to 2013.

But the latest manufacturing report suggests the worst is over for the sector, which accounts for more than 10% of the economy.

James Knightley, economist at ING Bank, said the report "offers hope that the GDP contraction in the fourth quarter will not be repeated in the first quarter of 2013".

Howard Archer, chief UK and European economist at IHS Global Insight, added a note of caution over the sector's outlook for the year ahead.

"The manufacturing sector may be past the worst after a pretty torrid 2012, but it still has its work cut out to return to sustainable decent growth in the face of ongoing challenging domestic and international conditions," he said.