Interest rates look set to rise after figures showed the manufacturing sector was heading out of recession.

The Office for National Statistics said manufacturing output rose 0.8 per cent in April, the biggest rise for eight months.

Ten out of 13 sectors saw improvements in output, with the beleaguered hi-tech industry reporting some of the most significant gains.

Computer manufacturers reported a 3.1 per cent jump while the semiconductor sector saw a 5.4 per cent surge.

Industrial production, which includes energy output and mining, was up 1.1 per cent on the month - the strongest rise since July 1999.

In separate figures, the ONS showed the UK's balance on trade in goods and services narrowed in April, from a revised £2 billion deficit for March to a provisionally-estimated £1.6 billion deficit.

The global trade deficit was £2.4 billion, better than many had forecast, and the ONS said the trend estimate suggested the UK trade deficit was narrowing.

But while the data is good news for the UK economy, most agree it now means a hike in the cost of borrowing is imminent.

The Bank of England's Monetary Policy Committee, which meets in July, slashed interest rates to a 38-year low in 2001 to ward off the global economic slump.

Philip Shaw, economist at Investec, said he was now "even more convinced" the MPC would raise rates.

He said: "It remains concerned over the rapid pace of household spending, and the growing dangers of a house price bubble will convince many committee members of the merits of moving earlier rather than later."

Any rise would be the first since February 2000's quarter-point rise to six per cent.