Hopes of a pick-up by the manufacturing sector were dealt a blow yesterday when data for September showed an unexpected fall in output.
Factory output decreased by 0.3 per cent on the previous month - the second consecutive monthly decline and defying hopes for a rise.
It was the biggest drop since March and compared with analysts' forecasts of a rise of 0.3 per cent. That left output 0.8 per cent weaker than a year earlier in September.
The latest figures from National Statistics offset signs of optimism in a report from the Chartered Institute of Purchasing and Supply.
Upbeat data from CIPS said manufacturing in the UK grew at its sharpest rate of the year last month.
Experts expect the Bank of England to keep interest rates on Thursday at 4.5 per cent.
"The disappointing decline in manufacturing output is most unlikely to sway the Bank from leaving interest rates unchanged," said Howard Archer, economist at Global Insight.
Philip Shaw, chief economist at Investec in London, said: "It should keep markets alive to the possibility that the next move in rates is likely to be down but not this week."
The ONS said the most significant slump in manufacturing output was 1.6 per cent in the chemicals and manmade fibres industries. There were no significant increases in any areas.
Overall, industrial production was also weaker than expected, rising by just 0.5 per cent instead of the 0.8 per cent predicted by analysts. That was because of maintenance work being extended.
Manufacturers have suffered this year from the strength of the pound, weak growth in Europe and intensifying competition from Asia that has limited their scope for raising prices.
David Page, economist at Investec Securities, said: "Manufacturing has now contracted for two consecutive quarters for the first time since the start of the year."
He said he was "somewhat dubious" about the outlook for the rest of the year.
Economist Jonathan Said, at the Centre for Economics and Business Research, said: "Markets may be partly surprised by the news. However, it is unlikely to counter the boost received last week from the positive CIPS index."
"The figures reinforce our view that the threat of renewed manufacturing recession is very real," said David Kern, economic adviser to the British Chambers of Commerce, whose figures showed a factory slowdown.
Birmingham Chamber called for urgent action from the Government and the Bank of England to support manufacturing.
James Cooper, policy advisor, said the figures were disappointing, especially against forecasts of a rise in manufacturing output after a 0.2 per cent fall in August.
"The sector is now technically in recession for the first half of 2005," he added.
"The British Chambers economic forecast signals negative growth in manufacturing output for 2005 as a whole, even if we assume a gradual improvement from now onwards. The Government must act firmly and rapidly to remove the threat of further tax increases on business given the acute underlying weaknesses in the manufacturing sector."