Manufacturing has seen positive growth in new orders across most UK regions over the past three months, despite the impact of the global credit squeeze on confidence, according to the latest quarterly Regional Trends Survey by the CBI and Experian.

However, looking ahead, expectations for new orders in the coming three months are at their weakest for almost two years at the UK level, although they are still marginally positive. The most downbeat regions are Wales, the West Midlands and Scotland, who all expect a decline, but the East Midlands continues to stand out with a persistently positive outlook.

The outlook for jobs in the manufacturing sector has become less discouraging as healthier trends for orders and output in many regions provide support to employment prospects. In contrast to the persistent job losses of recent years, five regions expect little or no change over the next three months, while modest job gains are expected in the East Midlands.

CBI principal economist Lai Wah Co says: "UK manufacturers have been busy over the past three months, with strong orders prompting a healthy flow of output, particularly in the English regions.

"Manufacturers expect a slowdown in orders growth going forward, but this is hardly surprising given the backdrop of higher interest rates. However, this weaker pace of demand may make it harder for firms to pass on higher costs in the face of sharp rises in oil and commodity prices.”