Bank of England rate-setters came under more pressure to cut borrowing costs today after a surprise fall in manufacturing output in March.

The 0.5% decline shown by official figures contrasted with expectations of unchanged manufacturing production during the month and comes a day after survey evidence of slowing activity in the services sector.

There were "widespread falls" in manufacturing output led by a 1.3% decline for transport firms such as car makers and shipbuilders, according to the Office for National Statistics (ONS).

Despite the sudden fall-off in March, overall output across the sector increased 0.3% during the first quarter of 2008 after gains in January and February.

Capital Economics economist Paul Dales said the gloomy figures made the Monetary Policy Committee's (MPC) rate decision - due tomorrow -"a closer call than a few days ago".

He said: "The fall in manufacturing output supports our view that industry will not be able to compensate for the consumer slowdown.

"Coming after yesterday's weak services survey, this data may boost hopes that the MPC will cut rates again tomorrow."

The MPC cut rates for the third time in five months in April but has not voted for back-to-back reductions since November 2001 in the wake of the September 11 terrorist attacks.

The committee is also charged with keeping inflation pegged to 2%, but the cost of living is currently running above target at 2.5% - limiting the pace at which the MPC can cut rates to help the economy.

But the manufacturing figures - as well as the service sector data - will add weight to the arguments of "dovish" MPC member David Blanchflower, who last month called for a 0.5% cut to stave off the risk of the UK suffering the same economic woes as the US.

Although the committee eventually elected for a less drastic 0.25% cut to 5%, a three-way split emerged as two policymakers called for rates to be held because of inflation risks from surging oil costs and a weak pound.

Global Insight's chief UK economist, Howard Archer, said another rate cut tomorrow was a "distinct possibility".

He added: "The recent stream of weaker data suggests that the UK economic downturn is deepening and widening."