By Daniel Hunter

The UK's manufacturing sector reported an increase in new orders and exports in August, according to business lobby group the CBI.

The CBI Monthly Industrial Trends Survey found that output in the manufacturing sector grew steadily in the three months to August and is expected to continue into at the least the next quarter.

Twenty-one per cent of manufacturers said their order books were above normal, but 22% said they were below normal. The balance of -1% was improved on the -10% balance seen in July.

Despite the increase in export orders, the CBI said they remained below average in eight of the eighteen sub-sectors including mechanical engineering and metal manufacture.

Meanwhile, manufacturers expect average prices to fall in the next three months after being flat last quarter, pointing to further pressure on margins.

Rain Newton-Smith, CBI Director of Economics, said: “While the rebound in manufacturers’ total order books is encouraging, many firms are still struggling in overseas markets.

“On the one hand, the strength of Sterling and cheaper energy are reducing factory input costs, but the strong pound is also hitting export prices and margins hard.

“With only 4% of the UK’s exports going to China, the country’s slowdown is not a direct cause of concern for our manufacturers, but it will make life harder for our firms in exposed sectors like metals and commodities.”