The Quarterly Industrial Trends survey by the Confederation of British Industry showed 28 per cent of companies are more optimistic about the

business environment than four months ago while only 15 per cent are less optimistic.

Total new orders to manufacturers fell modestly, but the decline was expected and was the slowest since July last year, the CBI said.

Export orders continued to fall but at the least extent since April 1997.

Optimism over future export orders also improved and was better than at any time since January 1997.

Domestic orders were broadly stable for the first time since last April and over the next four months domestic demand was set to grow with expectations clearly positive for the first time in 18 months.

Nick Reilly, chairman of the CBI's economic affairs committee and chairman and managing director of Vauxhall Motors, said: "Manufacturers could be glimpsing a more positive future with output expectations for the short term becoming more firmly based.

"However manufacturing output is still significantly lower than 12 months ago and with companies expecting only modest growth from a low base this is not a great success story."

He added the improvement in business confidence had not fed through to manufacturers' investment plans for the year ahead which remained weak and were likely to be effected by uncertainty over interest rates and Sterling.

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