An unexpectedly strong recovery by the manufacturing industry kept the economy on course during the early months of this year, offsetting a marked slowdown in the growth of service activities.

As a result, Britain's gross domestic product grew by 0.6 per cent in the first quarter of 2006, equivalent to 2.4 per cent over a full year and close to the long-term trend.

This first estimate by National Statistics - liable to be revised as more detailed numbers come in - shows the same rate of overall growth as in the fourth quarter of 2005, itself a useful recovery from a quiet performance earlier last year.

But this unchanged scenario concealed a big shift of emphasis in the economy.

Manufacturing grew by 0.5 per cent, reversing a 1.1 per cent decline in the final months of last year.

At the same time a brisk pick-up in North sea oil and gas extraction, along with a cold-weather boost to oil and gas supplies, drove the broader measure of production 0.7 per cent higher, its sharpest increase for nearly seven years.

That made up for the effect of slack retailing which trimmed back the growth of services generally to 0.6 per cent from 1.0 per cent in the fourth quarter of 2005.

James Cooper, policy adviser at Birmingham Chamber of Commerce and Industry, welcomed these "very encouraging numbers".

He said: "UK Plc is starting to get back on track. It is especially welcome to see the manufacturing sector recovering strongly, although we urge caution.

"The rise in oil and gas output is countered by high energy prices, the service sector is still performing well, although the drop-off in retail sales will be a cause for concern.

"Coupled with last week's low inflation figures, this will cement business hopes that interest rates will stay on hold when the Bank of England Monetary Policy Committee makes its latest decision next week."

NS said the sharp slowdown in the rate of service sector growth was due largely to a 0.7 per cent fall in retail sales. Motor trades were also down, but hotels and restaurants kept on growing.

On a year-on-year basis, overall economic growth since March, 2005, rose to 2.2 per cent from 1.8 per cent in December. The new annual rate is the highest since 2.6 per cent in the fourth quarter of 2004.

NS said construction, which accounts for the bulk of the remaining seven per cent of GDP, rose by 0.7 per cent in the latest three months, up from growth of 0.2 per cent in the fourth quarter of last year. Year-on-year construction output was 1.0 per cent higher after a 0.4 per cent increase in the 12 months to December.

Agriculture, forestry and fishing, representing only one per cent of GDP, contributed quarterly growth of 0.8 per cent, more than recouping a 0.6 per cent decline in October/December.