SCOTTISH manufacturers have enjoyed strong rises in total new orders and output volumes in the last three months, and increased their workforces significantly, according to a closely-watched survey.

The latest quarterly Scottish industrial trends survey, published yesterday by the Confederation of British Industry, also highlights a sharp increase in optimism among manufacturers north of the Border.

In the latest survey, conducted between June 19 and July 9, 51 per cent of Scottish manufacturers said output volumes had increased in the past three months and only eight per cent reported a decline.

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The net 43 per cent reporting a rise points to an acceleration in the pace of increase of output volumes. In the previous quarterly survey, a balance of 36 per cent of firms had reported a rise in volume of output.

A net 43 per cent of respondents reported a rise in total new orders in the past three months. This signals a sharp acceleration in total new order growth, with a balance of 23 per cent having reported a rise in the previous survey.

However, the latest survey signals new order growth is being driven by domestic work. New export orders were flat in the latest survey period, after a modest rise in the preceding three months.

The pound's rise against major currencies including the euro and dollar will have crimped Scottish manufacturers' competitiveness in key overseas markets. And trading conditions remain tough in some eurozone market-places.

The CBI noted the increase in optimism among Scottish manufacturers in the latest survey was the sharpest since April 1973. A net 48 per cent of firms reported a rise in optimism about the business situation over the past three months.

A net 28 per cent of Scottish manufacturers increased employment in the past three months. An identical balance projected a rise in the workforce in the next three months.

While Scottish manufacturers predicted further significant increases in output volumes and total new orders in the next three months, the export position is expected to remain flat.

The survey signals investment by Scottish manufacturers on product and process innovation, training and retraining, buildings and plant and machinery will increase significantly in the coming 12 months.

Iain McMillan, director of the CBI in Scotland, said: "Scotland's manufacturers are feeling upbeat as their domestic order books and output power ahead, reflecting the firming economic recovery. It's also really encouraging to see more manufacturing jobs being created and businesses planning to increase their investment.

"But firms are reporting weak export orders and are not optimistic about the situation improving."

He added: "Boosting exports is critical to getting Scotland's economic growth on a sustainable long-term footing. With the spotlight on Scotland for the Commonwealth Games, now is the time to pick up the pace."