As a result, firms expect production to fall over the coming quarter, according to the CBI’s latest monthly industrial trends survey.

Of the 434 manufacturers who responded, 18% reported total order books to be above normal, while 41% said that they were below.

The resulting survey balance of -23% is the lowest since October 2010 (-28%).

Export demand also remained depressed with 44% saying export order books were below normal expectations.

In line with weakened order books, manufacturers expect to reduce production over the next three months, the research found.

Ian McCafferty, CBI chief economic adviser, said: “Conditions in the UK manufacturing sector remain difficult, with demand both at home and abroad subdued. The weaker export performance no doubt reflects on-going instability in the Euro area, our biggest export market, and its knock-on impact on prospects for the real economy.

“A clear and orderly resolution to the crisis remains essential to prevent further adverse effects on both UK manufacturing and the wider economy, and to lift business confidence.”

Published with permission of TheBusinessDesk.com

Of 470 manufacturers surveyed, 22% described total orders as above normal, and 31% said they were below. The CBI says the resulting balance of -9% indicates order book levels slipped back in September, though this measure remains well above its long-term average of -18%.

The news comes as Leeds manufacturers report a rush of new business wins and investment, and will be welcomed following the announcement by defence giant BAE that it is to cut nearly 900 jobs at its manufacturing plant in East Yorkshire.

Allied Glass, manufacturer of glass containers for the premium spirits industry including leading brands such as Diageo, Chivas and William Grant & Sons, is investing millions in new machinery and staff as its new management team prepares to conquer new markets in Europe and further afield.

The Leeds-based business went through a secondary management buyout a year ago in a deal valuing the manufacturer at £75m.

Managing director Alan Henderson sees diversification into Europe as “a key part of the growth” of the business, which is backed by the private equity arm of Barclays Bank.

In an interview with the Yorkshire Post, Mr Henderson said that Allied wants to win new work in France, Italy, Spain and Poland: “We are targeting key brands that we want to be associated with and know we can do a good job for,” he said.

Allied has hired 30 people to staff a new facility in Leeds in a £600,000 investment to create a new operation decorating bottles.

Meanwhile, textile manufacturer Hainsworth has won a contract to kit out 2,000 firefighters across the West Midlands’ 39 community fire stations. The company already makes protective fabrics used by firefighters across the UK as well as in the US, Europe and the Middle East.

Now West Midlands Fire Service is to buy Hainsworth’s TITAN kit – a patented double cloth combining flame retardant properties on the face and high strength fabric on the back, resulting in increased thermal protection.

The eight-year contract will see the state-of-the-art kit rolled out to all firefighters in the West Midlands. The uniform, in dark blue and red, replaces the magma coloured uniforms previously worn by the service. The new kit will be manufactured by Bristol Uniforms.

And specialist brewery engineering firm Microdat has followed up a £500,000 equity investment from Finance Yorkshire with news of £5 million worth of orders for its innovative cask and keg handling systems which are being installed in breweries across the UK

• Manufacturers reported 33% growth in export sales and 11% growth in export orders, the largest reported improvements in over two years
• Matched by a 27% increase in sales in the domestic market (the third consecutive quarter of improvement) and a 8% increase in orders (second consecutive quarter of improvement)
• 43% report an increase in profit expectation, most positive figure in over two and a half years
• 44% have increased their workforce and 20% are recruiting

The findings are consistent with the results of the CBI’s latest quarterly Industrial Trends Survey which shows an export-led rise in manufacturing production for the first time in two years: 31% said output rose during the last quarter of 2009, the first time since January 2008, boosted by relative weakness in Sterling and improving global demand.

Engineering Employer’s Federation has also forecast export-led growth of up to 3.4% in manufacturing during 2011, although performance will be uneven across individual sectors. Mechanical equipment, metal products and metals will see strong quarter on quarter growth throughout the year, while transport and automotive will see fall in output as scrappage schemes run out and as a result of cuts in public spending