Small and medium-sized (SME) manufacturers saw their output grow in the last three months of 2007, a Confederation of British Industry (CBI) survey has claimed.
The latest quarterly SME Trends survey stated that ten per cent of SME manufacturers announced output had grown.
12 per cent also declared growth in export orders, the strongest figures since October 1995.
The firms however are not expecting the trends to continue and are pessimistic on the future.
The current economic slowdown is expected to have a sizeable effect and reduce general demand.
Four out of five firms said that a lack of orders was likely to limit output over the next three months.
Rising input costs are also expected to take their toll, with 30 per cent of SME manufacturers reporting costs had gone up in the past quarter and 29 per cent expecting them to rise again.
Employment is believed to be in line with the long term average with 12 per cent of firms anticipate job cuts.
Russell Griggs, chairman of the CBI's SME council said: "Though smaller manufacturers enjoyed the best overseas demand in over 12 years last quarter, and last week's interest rate cut will provide some relief, uncertainty about the future is growing across the sector.
"Firms, especially the smallest, are no longer able to absorb rising input costs and, even with fears of weakening demand, are now being forced to raise prices. This continued squeeze on profit margins mean that product and process innovation is ever more important," he added.
Mr Griggs concluded that with the global economy slowing confidence amongst the SME manufacturers was low.
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