An increase in optimism among Britain’s small and medium-sized manufacturers was evident in the findings of the latest CBI SME Trends Survey.

This quarterly report questions more than 400 companies across the UK about their sales and growth.

The results revealed that despite a decrease in export orders for the second consecutive quarter, there’s been steady growth in domestic orders and overall output.

On another healthy note, 30% of manufacturers have more employees than they did a few months ago, compared to only 12% with less. Plus, a further 17% increase in employment is anticipated over the next quarter.

When asked about the current business conditions, 32% of SMEs manufacturers said they were feeling more optimistic, while 18% said they felt less so.

On balance, this was a 4% increase in overall optimism since the last report.

While domestic orders are expected to grow further over the coming months, exports looklikely to continue decreasing towards October.

Why is the export market struggling?

Around 18% of small manufacturers surveyed said their export orders had risen over the last quarter, while 26% reported a fall.

Firms are expecting a further decline of -6% over the next few months. Pricing was the main issue cited by 49% of businesses for causing problems with the UK manufacturing export market.

Prices fell by 19% this quarter – the fastest decline since October 2003.

Anna Leach, CBI Head of Economic Analysis, said: “Optimism among smaller manufacturers improved this quarter, alongside steady employment growth, rising output and new domestic orders.

“But the relative strength of the Pound against the Euro is hitting export orders and margins, while uncertainty regarding Greece threatens growth prospects in the Eurozone.”

Do you run a small manufacturing business in the UK? Let us know your views on these latest survey results.