In the industry body's quarterly survey of 480 businesses, 51% reported a fall in orders for the three months to July while 17% reported an increase.

The CBI said that the resulting balance of -34% was an improvement on the previous quarter's balance of -51%, the worst figure since the survey began, indicating that the pace of decline in the sector is slowing.

Russel Griggs, chairman of the CBI's SME Council, said: "Business conditions remain difficult for the UK's small- and medium-sized manufacturers. Orders and output are still falling, but things aren't quite as gloomy as they were three months ago."

The findings of the survey tally with the recent BPIF Directions poll that found the number of printers reporting a downturn in trade was slowing but remained high.

However, according to the CBI survey, expectations of a boost in exports driven by the weak pound were dashed as volumes of export markets shrunk by a greater than expected level in the three months to July.