PRESSURE on the Bank of England to increase interest rates rose last night amid signs that the economy may be heating up.

A key industry barometer showed the manufacturing recovery was gathering pace, with export order growth at its highest level for five years.

In marked contrast to forecasts that the consumer boom is cooling, the Confederation of British Industry (CBI) said retailers enjoyed another blistering month of sales in April.

The annual rate of growth recorded by the CBI was the biggest since August 1988 as good weather lured out shoppers.

The Bank of England, whose rate-setting Monetary Policy Committee (MPC) holds its monthly meeting next week, has indicated that it is confident consumer spending will begin to slow as manufacturing recovers, helping to keep inflation under control.

But yesterday's figures follow data released on Tuesday that showed record increases in house prices and credit card spending.

John Butler, economist at HSBC bank, said: "We believe, on economic indicators alone, that interest rates should be going up at the next meeting."

Interest rates were cut from six per cent to four per cent last year as the MPC looked to shield the UK from the economic slump.

But the low rates have fuelled a consumer boom, with credit card spending rocketing.

The recession-hit manufacturing sector is now fighting back, as shown by figures from the Chartered Institute of Purchasing and Supply (CIPS) managers.

CIPS' activity index for the sector rose for its fourth consecutive month in April to 53.4, its highest level for more than two years.

With a reading above 50 indicating growth, CIPS said the figure was "tangible" evidence of recovery within the hard-pressed sector, which remains critical to the North-East economy.

Export orders grew at their fastest pace for more than five years as the US manufacturing recovery acted as a catalyst for growth in Europe, CIPS said.

Philip Shaw, chief economist at City stockbroker Investec, said the figures showed the manufacturing sector was getting "back on its feet again".

But he said the Bank would probably want to see further proof that the spending spree was continuing before pushing up the cost of borrowing.

The CBI said retailers expect sales to slow to more modest growth rates over the coming months after the bumper performance in April.

Alastair Eperon, chairman of the CBI's Distributive Trades Survey panel and a director at Boots, said cars, summer clothing, groceries and DIY products sold well.

But he said: "The underlying growth in retail sales is still slightly slower than last autumn and retailers expect a more modest pace of growth to return in coming months.