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The economy's limp into positive figures is a "cause for concern", according to the Birmingham office of KPMG. The firm's comments come as it was revealed that gross domestic product (GDP) grew by just 0.5 per cent in the first three months of 2011 – below the hopeful prediction of 1 per cent previously forecast.

Business leaders across the region have reacted to the limited growth, with the Coventry and Warwickshire Chamber of Commerce saying the figures "by no means suggest we are on a sustainable road to recovery".

The improvement in GDP has eased fears of a double-dip recession and follows a 0.5 per cent contraction in the economy at the end of last year.

The figure could ease pressure on the Bank of England's Monetary Policy Committee to raise interest rates as inflation remains high.

Mike Steventon, senior partner of KPMG in Birmingham, said: "While it is always good to see the economy growing, these figures do provide cause for concern. While growth is positive, given the low base of the comparative from the previous quarter, it is a sure sign that there is still fragility in the economy and it will take some time to overcome this.

He added that it was "of concern that we are not seeing more pick up in the manufacturing sector, which at present is driving our recover".

Steventon said the pressure on manufacturers will continue to rise as the price of raw materials continues to increases.

However, he added: "On the positive side, however, business confidence remains crucial in achieving economic growth and with many local businesses having got their housekeeping in order over the last few years, the foundations upon which to build this growth are now strong."

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, reacted to the news with cautious optimism.

She said: "These figures by no means suggest we are on a sustainable road to recovery and there is still a great deal to be done on the back on these latest numbers. In light of the GDP figures at the end of last year this will be a boost to confidence for the whole economy.

"Had we seen negative growth again we would have been in a double dip recession and that would have had the reverse effect on confidence.

"Despite the figures today, and some confidence returning to businesses, we still need to lobby hard for low interest rates for the benefit of our members and for red tape to be paired back by the government."

Mike Ashton, spokesman for West Midlands Chambers of Commerce, agreed that there was a tough road ahead. He said: "We must not underestimate the challenges ahead. Businesses are still facing real difficulties in managing cashflow and nearly a third of our members cite inflation as their biggest concern."

Graeme Leach, chief economist at the Institute of Directors, described the GDP results as "a very mixed bag".

He said: "Pessimists point to the fact that GDP is stagnant with output unchanged over the past six months. Today’s GDP numbers add further weight to the case against an interest rate rise.

"But the optimists can’t be ignored either. Leaving aside the construction sector – which contracted sharply – overall services output rose strongly by 0.9 per cent, although this did follow a decline of 0.6 per cent in the previous quarter."

Leach said that too much emphasis should not be placed on the results of the first quarter of the year.

"The more important figure will be Q2 when we begin to see the squeeze on real incomes really kick-in and what effect this has on consumer spending, together with the implementation of the public spending squeeze," he said.