Factories report rising demand

Britain's small and medium-sized manufacturing firms have seen an upturn in business over the past quarter thanks to increasing demand at home and from overseas, the Confederation of British Industry said today. However, the employers' group also warned that many businesses were struggling with mounting cost pressures and that they were continuing to find it difficult to get credit, despite the pressure on the banking sector to be more flexible.

A CBI survey of more than 400 manufacturers reveals that some 36 per cent saw a rise in orders over the three months to the end of April, compared to 26 per cent that reported a fall. The positive balance of 10 per cent is the first sign of growth registered by the CBI's quarterly surveys since the beginning of 2008.

With sterling continuing its weakness against other currencies, the export market has provided a particular boost. The companies reported a positive balance of 18 per cent on orders from abroad rising, while the figure for domestic sales was a much flatter 2 per cent. The CBI said export orders appeared to be growing at their fastest rate since July 1995 and added that while the domestic market was less strong, its stabilisation was to be welcomed.

"The UK's smaller manufacturers are finally reaping the benefits of all their hard work as well as a relatively weak currency – exports are growing steadily, domestic demand and production are stabilising, and firms are feeling more upbeat about prospects," said Russell Griggs, chairman of the CBI's SME Council.