NEW figures released yesterday showed industrial production weakening.

Recent conflicting reports have led to confusion about the health of the manufacturing sector.

While companies showed a growing confidence, official data from the Office for National Statistics (ONS) was more negative.

The ONS said manufacturing output fell 0.3 per cent between February and March compared with a 0.6 per cent fall the previous month.

The sector suffered widespread falls, the most significant being a 1.7 per cent decline in output in the machinery and equipment industries.

During the first quarter as a whole, manufacturing output fell by 0.5 per cent, compared with 0.3 per cent in the previous three months.

The figures would lead to a further widening of the trade gap as UK manufacturers failed to satisfy domestic consumer demand, analysts said.

They said that the output fall was unlikely to prevent further interest rate rises following last week's increase to 4.25 per cent, with the Bank of England likely to continue raising rates to dampen strong consumer spending.

John Butler of lender HSBC said: "The imbalances within the economy are set to worsen."

The Liberal Democrats repeated recent calls for Chancellor Gordon Brown to take measures to curb spending and to boost manufacturing.

The party's Treasury spokesman, Vince Cable, said: "With 750,000 jobs lost in manufacturing since 1997, people are justifiably anxious about their jobs."