SMALLER manufacturers have seen total orders decline at the fastest rate for a year, according to the latest CBI research.

The latest quarterly survey of small and medium-sized companies, released by the employers’ organisation shows recovery is proving elusive for the struggling manufacturing sector.

The survey shows 33 per cent of manufacturing firms saw total orders fall compared to only 23 per cent who saw them rise.

The negative balance of 10 per cent is the largest fall since October 2003 and compares with a negative balance of three per cent in the previous survey.

Companies are expecting another fall in total orders over the coming quarter, but at a more moderate pace.

Nigel Bourne, CBI South East regional director, said: "Smaller manufacturers have endured their toughest quarter for a year.

“Recovery is proving difficult to maintain as companies struggle with commodity costs, such as oil, that have hit record highs. Confidence has slumped with orders falling at home and abroad."

The CBI is also stressing that only an unexpectedly strong upturn in demand could justify a further rate hike.

Mr Bourne added: "Manufacturers of all sizes will be hoping that interest rates are either at or extremely near their peak.”