Confidence among the country's smaller manufacturers has risen for the first time in two years, according to a new survey by the Confederation of British Industry.
The employer's federation said that a three-year decline in orders and output among the sector had also come to an end, suggesting that many smaller companies were looking forward to a successful 2004.
However, the CBI warned that the nascent economic recovery had not lifted the fortunes of smaller firms as much as larger ones and that job-cutting continued over the past quarter but the rate of decline had eased to the lowest level for more than five years.
Hugh Morgan Williams, the chairman of the CBI's small and medium-sized enterprise council, said: "Smaller manufacturers will be greatly encouraged by these findings. The three-year slide in orders and output has finally halted and firms will now be hoping the worst is behind them. Over the coming quarter smaller firms expect positive growth but we should remember few have seen it yet. Jobs are still being lost and the broader economic recovery must endure for smaller firms to truly enter positive territory."
The latest CBI quarterly survey of small and medium-sized firms published today also found that companies do not plan to increase investment in buildings, plant and machinery but spending plans on innovation and training are the most positive for more than 18 months.
The balance of companies in the survey reporting rising orders in the final quarter of last year was +1 per cent compared with -25 per cent in the three months to the end of October 2003. A balance of +8 per cent of firms now predict orders will rise, the most positive expectation for almost two years. However, smaller companies were less positive about orders than medium-sized ones.
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