British industrial output grew at its fastest pace in 25 years in July, making up all the ground lost due to an extra public holiday in June and raising the chances that the economy is crawling out of recession.

Manufacturing output jumped 3.2 percent in the month of July after a drop of 2.9 percent in June, when an extra holiday to mark Queen Elizabeth’s 60 years on the throne hit output, the Office for National Statistics said.

This was the strongest rise since July 2002 and above even the most optimistic economists’ forecast.

The wider reading of industrial output, which includes energy production and mining, leapt 2.9 percent in July, the biggest rise since February 1987.

Separate data from Office for National Statistics showed cost pressures for firms were rising again, a potential concern for the Bank of England, which is hoping that falling inflation will ease pressure on cash-strapped British consumers.

Britain’s economy has still not fully recovered from a 2008-2009 slump. It slipped back into recession late last year as the euro zone debt crisis hurt export demand and business confidence, compounding the effects of the government’s tough austerity plans aimed at erasing a huge budget deficit.

While the price and production data may raise doubts over the need for further monetary stimulus from the central bank, the economy’s fragility and vulnerability to Europe’s debt crisis mean most economists still expect another dose of easing.

Business surveys have indicated a stabilisation of demand for manufacturing products in August and service firms reported improved business.