Despite the rise, the CBI warned that underlying sales growth remained weak and said a further cut in interest rates was needed.
The data comes a week before the Bank of England is due to meet to discuss rates.
Speculation has been rising that the Bank will cut the current base rate of 3.75% by a quarter percentage point in order to boost growth.
Last week's GDP figures showed the economy grew by a lower-than-expected 0.2% in the January to March period.
The latest manufacturing index from the Chartered Institute of Purchasing and Supply (CIPS) rose to 48.3 last month, up from March's revised figure of 46.3.
The new orders index jumped from 45.2 to 49.8 — its highest level since December.
"With an end to much of the fighting, and the greatly reduced uncertainty surrounding issues such as oil prices, panel firms reported a more stable situation for demand in April," CIPS said.
But despite the increase, the figure remained below 50 indicating that the sector is still shrinking.
"Although the index still points to contraction, the flavour of the survey was markedly more upbeat than the previous few months," said John Butler, an economist at HSBC.
"The survey is still not great but it at least suggests that much of the doom and gloom that had built up following last month's survey was misplaced."
FRENCH ECONOMY SHRINKS
The French economy was shrinking in the last three months of 2002, new figures show.
Previous estimates of slight growth have proved over-optimistic, with the latest statistics showing the economy contracted by 0.1% during the three month period.
The bad news about the state of the French economy, the second largest in the eurozone, coincides with equally gloomy data about business morale.
French business sentiment slumped for the second consecutive month in April as the Iraq war hit confidence, according to official figures.
Businesses have also been unsettled by publicity campaigns urging US consumers to boycott French products, including high-profile exports like wine and cheese.
Despite the clutch of worrying statistics, the French economy is still predicted to grow by 1.2% this year.
The latest raft of figures also confirm that the public deficit rose to 3.1% of gross domestic product in 2002, more than double that of the previous year and in breach of EU rules.
The 12 members of the eurozone are required to keep their budget deficits to below 3% of GDP in order to ensure stability.
Earlier this month, the European Commission criticised Paris for not taking adequate steps to reduce its deficit, and warned that it could rise to 3.7% of GDP this year.
It is the first time that official figures have confirmed that France has broken the rules.
Analysts thought the bad news from France, together with a weak survey on business confidence from Germany, would encourage the European Central Bank to cut interest rates later this month.
BLEAK OUTLOOK FOR JAPANESE ECONOMY
Japan's economy continues to be hit by a vicious circle of lower wages and weaker spending, according to government figures.
The average monthly wage fell 2.1% in March from a year earlier, the steepest drop in 11 years, the government said last week.
At the same time, official industrial output figures revealed a disappointing fall of 0.2% in March, as exports suffered.
The Bank of Japan said it would ease monetary policy to try and support the weak economy as it voted to raise the level of reserves available to banks for lending.
The 2.1% fall in wages follows a drop of 1.6% in the year to March 2002.
It is the sharpest fall since the Ministry of Health, Labour and Welfare started compiling the data in 1991.
FOUR ANTI-WAR EU STATES PROPOSE 'DEFENCE UNION'
Seeking to secure more global clout, leaders from Germany, France, Belgium and Luxembourg last week unveiled ambitious plans for a "European security and defence union" and vowed to immediately step up their military cooperation.
The blueprint said the four countries would set up a "multinational deployable force headquarters for joint operations" no later than 2004 and called on other European Union states to join efforts to create a Brussels-based "nucleus" collective planning and operational capability available for EU-led military operations, without recourse to NATO assets.
"We believe it is necessary to give new impetus to the construction of a Europe of security and defence," said a joint statement released by Belgian Prime Minister Guy Verhofstadt, French President Jacques Chirac, German Chancellor Gerhard Schroeder and Luxembourg Premier Jean-Claude Juncker.
QUAKE RESCUERS SEARCH TURKISH SCHOOL
Emergency workers have worked through the night to try to rescue dozens of children thought to be trapped under the wreckage of a school dormitory after powerful earthquake hit Turkey south-eastern area.
Rescuers are refusing to lose hope, despite finding only seven children alive. More than 80 remain unaccounted for after the four-storey building collapsed.
Across the affected region around 100 people are known to have died when the tremor struck at 0337 local time (0037 GMT) on Thursday with a magnitude of 6.4 — its epicentre close to the city of Bingol.
Prime Minister Recep Tayyip Erdogan promised an investigation as many blamed shoddy construction practices for the collapse of many buildings in the region.
'PROGRESS' ON WORLD TRADE DEAL
World economic leaders have said they have achieved "an unambiguous sense of commitment" to liberalising international trade.
Representatives of several dozen governments — including almost all industrialised nations — have been discussing reform of world trade at the Paris meetings of the Organisation for Economic Cooperation and Development (OECD).
As the meetings concluded, leading participants were unanimous in claiming that the political will for a new worldwide trade regime had been strengthened.
But most important sticking points, notably concerns on the part of developing countries and the continuing absence of reform to the EU farm subsidy regime, have yet to be tackled.
Substantial agreement is seen as crucial ahead of a meeting of the World Trade Organisation (WTO) in Mexico in September.
CASTRO ATTACKS US 'WAR' AIMS
Cuban President Fidel Castro has vehemently defended his recent crackdown on dissidents, saying Cuba must protect itself from the threat posed by the United States.
"In Miami and Washington they are now discussing where, how, and when Cuba will be attacked," Mr Castro told a huge May Day rally in Havana.
APPEAL FOR PEACE' ON US-FRENCH TRADE
French and US business leaders have warned of dire economic consequences — including recession — if the two nations' differences over Iraq spill over into trade.
Calls for consumer and commercial boycotts have come from politicians and campaigners in both countries since the US and France fell out over President Bush's decision to attack Iraq.
The appeal came in an open letter signed by 11 top executives from firms that included the French operations of Microsoft, IBM and McDonalds and published in the financial daily Les Echos.
US Secretary of State Colin Powell has said France would suffer consequences for having opposed the war on Iraq and that all aspects of Franco-US relations were under review.
MAY DAY MARKED ACROSS EUROPE
Major demonstrations are being held in many European countries to mark international Labour Day.
Trade unionist marchers have been joined in some cities by anti-war protesters and supporters of other causes.
Fears of anarchist violence in the UK had gone unrealised though there were clashes in Germany.
Opponents of pension reforms took to the streets in France and Austria, while eurosceptics protested in Sweden and the Czech Republic.
CYPRUS TRADE BAN LIFTED
The Greek-Cypriot authorities have announced a series of moves to end the isolation of the Turkish half of the divided island.
Turkish Cypriots will be able to trade in the south, and gain access to healthcare and other state benefits available to Greek Cypriots.
The Nicosia government will also start accepting official documents — such as car registration plates — issued by the breakaway north, which is only recognised by Turkey.
JAPAN'S TOP BANKER GOES IT ALONE
The new head of Japan's central bank has asserted his independence from the government — and brought the rally in banking shares to a close along the way.
In a rare group interview Toshihiko Fukui, who returned to the Bank of Japan in May after five years in the private sector, poured cold water on speculation that the Bank would fall in with government demands to buy banking shares.
"That's just an idea designed to support bank shares," he said, drawing a distinction with the Bank's programme of taking banks' shareholdings in other companies off their hands.
TAIWAN FIGHTS SARS WITH STIMULUS
Taiwan's legislature is planning to double the size of a long-planned stimulus package worth more than 50bn New Taiwan dollars ($1.4bn; £900m) to try to counteract the economic damage wrought by the SARS virus.
The NT$58.4bn stimulus programme, passed last week, was already in the works as a counter to Taiwan's 4.5% unemployment rate and its recent recession when SARS struck.
Now legislators want to add another NT$50bn, two-thirds of which would be spent directly on cushioning businesses on the ropes thanks to the slowdown.
'BLOOD DIAMOND' DEADLINE SET
The international group trying to stop the trafficking in "blood diamonds" has given countries until the end of July to join the effort or be excluded from the legal diamond trade.
Representatives from 70 countries meeting in Johannesburg agreed to set a deadline of 31 July for nations to sign up for the certification system known as the Kimberley Process.
GREENSPAN WARNING ON TAX CUTS
The head of the US Federal Reserve has told politicians that if they back plans for big tax cuts then they must chop spending by hundreds of billions of dollars in return.
Alan Greenspan warned that spending needed to be cut by about $400bn (£250bn) over 10 years to counterbalance President Bush's plan to eliminate the double taxation of dividends.
The Fed chairman told the House Financial Services Committee that reducing dividend taxes would bring benefits.
But he said these could be wiped out by significant budget deficits and long-term interest rate rises.
BANGLADESH 'TO END TAX DODGING'
Bangladesh's finance minister has promised to put an end to widespread tax dodging rather than bringing in new taxes.
"We will not impose new taxes in the next budget, rather we will try to expand the tax net by bringing in more professionals and sectors to streamline the tax administration," said Finance Minister Saifur Rahmen.
CHINA SHUTS STOCK MARKET
China's authorities have ordered the closure of the country's stock exchanges until May 12 as part of attempts to control the spread of the deadly SARS flu.
The Shanghai and Shenzhen stock markets have both been told to take an extended May Day holiday because of the high concentration of people working there, the market regulator said.
QUICK WAR RAISES US CONFIDENCE
The quick end to the war in Iraq seems to have lifted consumer confidence in the United States.
Confidence rose in April for the first time for four months according to the Conference Board, a business research group.
Its consumer confidence index rose to 81 in April from a downwardly revised figure of 61.4 in March. Economists had not expected such a strong increase.
IMF PROBES ANGOLA'S OIL SALES
International Monetary Fund (IMF) investigators are arriving in Angola on the trail of almost $1bn which the IMF believes vanished from state coffers in 2001 alone.
The money, an internal report alleged late last year, came from oil sales, the cornerstone of Angola's foreign trade.
But instead of going to fund the country's development, more than $900m (£565m) disappeared.
Angola has insisted accounting problems, not theft, is responsible for the mismatch.
SHARES SINK ON ARGENTINE ELECTION FEARS
The Argentine stock market has racked up its biggest daily loss in more than a year as investors worry about the election candidates.
The favoured candidate of the markets, liberal economist Ricardo Lopez Murphy, did not progress to the second round of the presidential elections after Argentines went to the polls on Sunday.
Investors are now thought to be particularly fearful of the spending policies of provincial governor Nestor Kirchner, who will face controversial ex-president Carlos Menem in the run-off on May 18.
The country's leading share index fell 8.6% on the first day of trading since the elections, its biggest drop in 14 months.