The rate of growth in UK manufacturing activity dipped in March but is still healthy and shows a good level of saving and investment, according to a report from the Chartered Institute of Purchasing and Supply.

Its latest Purchasing Managers’ Index fell to 54.4 last month from February’s two-and-a-half years’ high of 55.5.

“The signs for the UK economy and its manufacturing sector in particular look very healthy,” said economist John Cornell. “These figures do not convince me that the Bank of England’s Monetary Policy Committee, which sets the interest rate, will change the Bank Rate this week from its current level of 5.25%.

“All the signs show me that the economy is in an expanding mode and that interest rates do not need to rise further, given that inflationary pressures seem to be under control at the moment.”

He continued: “The UK’s economy has been in pretty good shape overall since Labour were returned to power in 1997. Gordon Brown’s masterstroke as Chancellor was to hand over the setting of the Bank Rate to the Bank of England and this has worked very well for the country over the years.”

Geoffrey Dicks, UK economist at the Royal Bank of Scotland, concurred with Cornell’s assessment. “UK manufacturing remains comfortable, even if the heady gains of February were not repeated in March.”