Small and medium-size manufacturers recorded strong output growth in the three months to the end of July, according to the latest SME Trends survey by the CBI.

Domestic orders and output both increased for the fourth consecutive three-month period; moreover, they are expected to grow robustly again in the next three months.

Numbers employed in the sector rose at their fastest rate since records began in October 1988; and while export orders were broadly flat, firms expect export growth to pick up in the next three months.

CBI deputy director general Katja Hall said: “Smaller manufacturers are settling into a regular growth pattern, with their order books and output growing for the fourth consecutive quarter. Firms remain upbeat about their business situation and they are hiring at their fastest rate since 1988.

However, export orders have underperformed, which may — in part — be because of the strength of sterling.

“We need the Government to get behind our SME manufacturers to help them to sell their products and services to new markets around the world, giving a sustainable boost to long-term growth.”