Manufacturers were not as badly hit by the disruption caused by the Queen's Diamond Jubilee celebrations as previously feared, figures have revealed.

The Office for National Statistics (ONS) reported a 2.9% decline compared to the previous month, after production was impacted by an extra bank holiday in June, but this was not as bad as the 4.5% expected in the City.

The better-than-expected figures fuelled hopes that the UK's double-dip recession may not be quite as deep as previously thought, after the ONS's preliminary estimate for second quarter GDP showed a shock 0.7% decline.

But economists warned the manufacturing sector still appears to be contracting and will struggle to lead the economy back to growth in the second half of the year.