UK manufacturing output plummeted by 1.5% month-on-month in January, official data have revealed, fuelling fears of a triple-dip recession.

And a leading independent think-tank yesterday estimated that the UK economy contracted during the three months to February.

The 1.5% drop in manufacturing output, unveiled in seasonally-adjusted figures published by the Office for National Statistics yesterday, wrongfooted the City and sent the pound to fresh two-and-a-half-year lows against the dollar.

Economists had forecast manufacturing output in January would be unchanged from December. The tumble in UK manufacturing output in January left it 3% lower than in the same month of last year.

Broader industrial production, which includes mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output, dropped by 1.2% month-on-month in January. This left industrial production in January down 2.9% on a year earlier.

The National Institute of Economic and Social Research estimated, in the wake of the industrial production data, that UK gross domestic product (GDP) in the three months to February was 0.1% lower than in the September to November period.

And the think-tank declared that it did not expect UK economic output to pass the peak to which it climbed in early 2008 until 2015.

UK GDP fell by 0.3% in the final three months of last year. Any further contraction in the current quarter would see the UK record its third recession since 2008.

Samuel Tombs, UK economist at consultancy Capital Economics, said the industrial production figures suggested that the economy was still struggling to rebalance and indicated that the "risk of a further contraction in GDP in Q1 remains high".

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The manufacturing figures are awful, even if it is possible that the snow had more of a negative impact than the Office for National Statistics indicate, and are a real blow to first-quarter growth prospects."

The pound fell to about $1.4830 during yesterday's session on the latest weak economic data – its lowest level since June 2010. It had recovered by 5pm to $1.4901, down slightly on the day.