The manufacturing sector has avoided slipping into recession after figures revealed a 0.6 per cent rise in output in December.

Large increases in the production of food, drink and tobacco meant output in the final three months of last year was up by 0.2 per cent.

December's rebound was stronger than expected by economists and dispelled fears of a second quarterly decline in output - the definition of a recession.

The latest figures are closer to the findings of a number of business surveys that have pointed to expansion in manufacturing.

Further good news was provided by an unexpected improvement in the UK trade deficit to £3bn in December, despite another record month for imports.

Exports to countries outside the EU rose four per cent as goods worth £17.2bn were sold overseas in December - up 2.5 per cent on the previous month.

That led to the deficit in goods easing to £4.4bn in December from £4.7bn a month earlier, while a surplus in services ensured the overall gap in trade narrowed from £3.3bn in November.

Engineering Employers' Federation chief economist Steve Radley said: "These figures should dispel any notion of recession in industry and back our view that official data has previously painted too pessimistic a picture of what is happening in the real economy."