The pound has rallied to its strongest level against the dollar since the beginning of the year, as industry surprised economists in March, growing more swiftly than had been expected.
Total industrial production rose by 0.5pc in March, despite predictions that the sector would remain stagnant after growth of just 0.1pc in February.
The pound climbed by more than 0.4pc against the dollar on the back of the data, rising to a fresh high of $1.5656.
Manufacturing, the largest chunk of the industrial sector, grew by 0.4pc in March, slowing slightly from February’s 0.5pc rise, according to the Office for National Statistics (ONS).
Vicky Redwood, of Capital Economics, said March’s figures “tentatively suggest that the recovery in the sector is starting to get back on track”. February’s manufacturing growth was revised up by 0.1 percentage points in the latest release.
“It does suggest that the industrial sector may have turned the corner, no doubt helped by the lower oil price,” Ms Redwood said. Total industry output and manufacturing production have both failed to return to their pre-crisis levels.
Surveys have suggested that the manufacturing sector has been growing more strongly, but these signs of stronger performance have yet to show up in the hard data.
But a recent fall in Markit’s survey of the industry has suggested that the sector slowed down in April, as private sector manufacturing growth appeared to fall to a seven-month low.
Fabrice Montagne, of Barclays, said that the weaker reading “would be in line with production barely growing in the coming months, which would be in contrast with ongoing improvements in the rest of Europe”.
“If structural weakness persists then UK exporters might not be in a position to benefit from this upswing,” he added.
The manufacturing data came as think tank Niesr estimated that the economy grew by 0.4pc in the three months to April, slightly faster than the 0.3pc GDP rise in the first three months of the year reported by the GDP.
Niesr said: “We expect the slight softening of GDP growth experienced in the first quarter of this year to be temporary and forecast the UK economy will expand by 2.5pc for the year as a whole.”
The ONS estimated that the industrial side of the economy contributed nothing to growth in the first quarter, leaving the dominant services sector to prop up the GDP figures.
The new data show that sectoral growth was in fact stronger, but not by enough to alter the level of GDP growth as measured to one decimal place.