Beleaguered manufacturers have turned the corner and are pushing economic growth back towards pre-September 11 levels.

The latest BDO Business Trends Report said improved export demand was helping many industrial firms to find their feet after a turbulent year.

The BDO's output index - an indicator of future GDP growth - has edged up consistently during the past six months to reach the same level as last July.

That suggests the UK economy will grow at an annualised rate of 1.7 per cent in the second quarter of this year, the report said.

Business advisors BDO Stoy Hayward said restocking and healthier worldwide demand had also driven the manufacturing output index to its highest level since July. The service sector output index held firm during March.

Businesses are less upbeat about their prospects, with the BDO Optimism Index down slightly in March. However, the report is still confident of upward growth and a significant rebound in business confidence in May's report.

The study's results are based on a range of business surveys published between March 1 and March 26.