BUSINESS investment by the struggling manufacturing sector fell sharply in the last quarter, official figures have shown.

Data from the Office for National Statistics showed investment by manufacturers into their businesses in the second quarter of 2001 slid 4.1 per cent, compared with the first quarter, to £4.3bn.

The figures include cash spent on items such as new buildings, computers and software, and give an indication of a company's financial position and confidence.

However, although the manufacturing sector continued to suffer, business investment overall rose 0.8 per cent in the quarter to £29bn, as services and construction investment gained.

Services investment rose one per cent to £21.3bn, while construction jumped 9.1 per cent to £3bn.

Simon Rubinsohn, chief economist at stockbroker Gerrard, said: "The modest rise on a quarter-on-quarter basis masked a sharp fall in capital expenditure in the manufacturing sector. Business investment, which rose rapidly during the latter part of the 1990s, appears to be stagnating."