THE benefits gained by the UK manufacturing sector in the global economic recovery seem to have disappeared overnight, an economist has warned.

David Page, of Investec, suggested industry's export markets have been devastated by the slide in the US dollar which was blamed for sales to the US tumbling by almost 30 per cent in January.

The news came as the Office for National Statistics (ONS) revealed the UK trade deficit hit a record high.

Economists were shocked by the gap in trade in goods and services of £4.6bn - far greater than the expected £3.3bn.

With the dollar at an 11-year low against the pound, the ONS said goods worth £1.9bn were shipped to the US in January, against £2.7bn a month earlier.

The US is the biggest single market for UK firms, with about 15 per cent of exports going there.

Trade with other economies whose currencies are closely linked to the dollar also fared badly, leaving exports to non-EU countries 19 per cent lower as manufacturers battled to be competitive.

Further bad news for the manufacturing sector came from production figures showing output rose by 0.2 per cent between December and January.

That was also weaker than expected and, together with the trade deficit, cast fresh doubt on the strength of the recovery in the UK manufacturing sector.

Mr Page said: "The help that the UK manufacturing sector looked like it was getting from the recovery in global demand seems to have disappeared overnight."

Simon Rubinsohn, stockbroker Gerrard's chief economist, said the data provided grounds for the Bank of England to be more cautious about raising interest rates.

He said: "An April hike in rates still remains a possibility, but unless the news flow regains a little more momentum, the authorities may prefer to hold fire for a little longer."