Both domestic and export orders dropped in the three months to October as output among small and medium-sized (SME) manufacturers fell, according to the new data.

The latest CBI SME Trends Survey of 434 smaller firms reported that output growth fell at the fastest pace since January 2013.

Domestic orders also fell for the first time in over two years, while export orders declined at their fastest pace since 2009.

26% of SME manufacturers reported an increase in total new orders, while 38% said they decreased, giving a rounded balance of -11%.


10% of firms reported an increase in export orders and 46% said they fell, giving a rounded balance of -35%, the lowest since April 2009.

In addition, 22% said they were more optimistic regarding their business situation, while 29% said they were less optimistic.

Overall, optimism about export prospects for the year ahead fell by -14%.

Rain Newton-Smith, CBI Director of Economics, said: "As demand has fallen, especially in the face of a strengthening Pound, our smaller manufacturers have had a tough quarter, with orders and output volumes dropping.

"Manufacturers expect conditions to stabilise somewhat over the quarter ahead, but remain concerned about the outlook for demand.

"Innovation and technology are crucial to driving productivity, and that's why it's vital the Government uses the Comprehensive Spending Review to prioritise spending that supports skills and innovation, spurring a revival in productivity growth in the UK."

(LM/CD)