SCOTLAND's manufacturers have reported an increase in orders following a long decline - in a development that will boost hopes growth in the sector is accelerating.
However, output fell in the latest quarter as they grappled with the fall-out from the economic slowdown, which took a toll on sales earlier in previous months.
The latest edition of the Industrial Trends survey by the CBI in Scotland points to a marked improvement in trading conditions for manufacturers in the latest quarter, which was reflected in a big increase in confidence
The employers' organisation found a balance of 15% of respondents reported an increase in new orders in the quarter.
This followed five successive quarters of falling orders. With a balance of 16% reporting a rise in export orders, compared with 15% in the previous quarter, CBI Scotland said concerns about political conditions in key export markets have eased.
Director of CBI Scotland, Iain McMillan, said: "This survey also provides further evidence that the domestic economy is improving, after a long and difficult period for industrial firms."
A balance of 7% of firms reported an increase in domestic orders rather than a fall.
In the five previous quarterly surveys, more firms reported a fall in domestic orders than an increase.
Respondents thinks conditions will improve, with a balance of 31% expecting orders to increase.
A balance of 21% of respondents said they were more optimistic about the business situation than three months ago, compared with 8% in the previous survey.
However, other findings suggest sector players still face big challenges. A negative balance of 7% reported that output fell in the latest quarter.
Some 67% said they are still working below capacity, compared with 68% in the previous quarter.
CBI Scotland said investment intentions for the year ahead remain mixed.
While a balance of firms plan to increase investment in innovation and training more respondents plan to cut spending on buildings and machinery than to increase it.
A balance of 21% expect their production costs to increase.
"High costs continue to pose a threat," said Mr McMillan.
He added: "Scottish industry needs to fight hard for every sale, and companies need to ensure that they are internationally competitive going forward. Policy makers at all levels can assist by keeping down costs which affect firms and by making it as easy as possible for firms to invest and export."
A balance of 6% of respondents expect to increase output in the current quarter.
The latest quarterly survey by Scottish Chambers of Commerce found there was a significant increase in confidence levels among manufacturers in the three months to September.
The organisation found orders rose at the strongest rate since the third quarter of 2007, before the recession that was triggered by the financial crisis.
The results of recent Purchasing Managers Index surveys by Bank of Scotland suggest growth in the private sector economy accelerated in the third quarter.
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