The manufacturing sector has been hailed as leading the UK's race to recovery from recession as the number of companies reporting financial strain fell year-on-year, according to insolvency specialist Begbies Traynor.

In the print and packaging sector the number of firms in difficulty fell by a massive 73% in the first quarter of 2012 compared to an overall drop of 17% across all sectors.

All other manufacturing businesses saw distress levels fall by 49%, with the exception of food and beverage producers which reported a 37% fall.

Non-manufacturing companies fared poorly in comparison, with the property services sector showing a 122% increase in distress and the construction sector reporting a 104% rise in the number of firms in difficulty.

Begbies Traynor partner Julie Palmer said: "Manufacturing is the star of the economy at present and the engine that could drive a recovery."

 "Typically in a recession, front-end businesses – such as print and packaging companies – are hit quite hard, as businesses slash spending in areas such as advertising. This has a knock-on effect on the print sector.

"The drop in the number of printers and packaging companies reporting distress suggests that people are starting to spend money again in this area, and that there is a willingness on behalf of UK businesses to move forward. While it is still early days, these results indicate that we may be moving out of recession."

Despite the positive year-on-year trend, the number of businesses in difficulty increased by 55% in the first quarter of 2012 compared with the previous three months, which the insolvency specialist attributed to a traditional post-Christmas slump.

Palmer added: "Tough seasonal trading conditions usually create quarter-on-quarter increases in distress in January, February and March each year. Some sectors such as retailing and construction are yet to see improvements, but the overall fall in distress compared to 12 months ago is a sign of some momentum towards overall recovery."