THE first glimmer of light at the end of the tunnel for British manufacturing industry was revealed by official March production figures yesterday. A separate survey showed retail sales volumes rose for the seventh successive time last month.

"This may explain why the Chancellor did not cut interest rates this week. We may be beginning to see a picture of improvement rather than stagnation in industry," said Mr David Mackie, an economist at investment bank, JP Morgan.

The Office for National Statistics (ONS) confirmed yesterday that it had abandoned plans to produce monthly figures on the output of the service industries because of lack of money, even though services account for nearly two thirds of the economy. Many analysts think too much attention is paid to manufacturing.

Manufacturing output edged up 0.2 per cent in March, to a level a fraction higher than its mid 1990 peak. It was 1 per cent higher than in December. Total industrial output, including mining and quarrying and the utilities, was up 0.3 per cent in March, and 0.2 per cent during the three months to March. The ONS said the trend in both manufacturing and industrial production remained flat.