A survey of export orders has eased fears of a manufacturing recession.

Although the Chartered Institute of Purchasing and Supply (CIPS) found that UK manufacturing had contracted for the third month in succession, its research suggested a return to growth could be imminent.

Demand for UK goods increased and there were reports that efforts to develop markets in the Middle East and East Asia, particularly China, had supported the recovery, CIPS said.

Economists said the rise in orders suggested the slowdown in the global economy was not as severe as was thought, and that yesterday's figures were good news for the UK economy, even though manufacturing was still in decline.

It comes less than 24 hours after Government statisticians said the UK economy expanded by only 0.4 per cent in the first three months of the year, leading many in the City to reduce their forecasts for annual GDP growth and speculate that a cut in interest rates may come soon.

Standard Chartered economist Gavin Redknap said any change in interest rates would have little impact on manufacturing because of its reliance on overseas markets.

But he said: "The Bank of England cannot help but be cheered by better news following months of disappointment. The report is unlikely to determine when the first cut comes, but it does add slight weight to the argument that the bank should wait before moving - and certainly wait beyond next week."