THE fallout from the coronavirus took a devastating toll on Scotland’s manufacturing sector in the latest quarter as orders and output fell at a record pace amid widespread job cuts a closely watched survey has found.

The results of the latest Scotland Industrial Trends study by the Confederation of British Industry underline the scale of the challenge facing the sector as firms grapple with the dramatic drop in demand triggered by the Covid-19 coronavirus.

The findings suggest conditions may be starting to improve slowly as lockdown measures are eased around the world.

READ MORE: Leading Scottish hotelier set to welcome guests' return after coronavirus lockdown

However, the outlook for many firms remains grim amid deep uncertainty about the prospects for the global economy.

“The quarterly data makes for hard reading for the Scottish manufacturing sector,” said Tracy Black, CBI Scotland director.

“Covid-19 has undoubtedly taken its toll, and, while there are some small signs of optimism ahead, too many companies and jobs are far from out of the woods.”

Ms Black said the results underlined the need for industry and government to work together to implement an ambitious economic recovery plan that prioritises jobs and investment.

READ MORE: 100,000 more Scottish jobs furloughed in a month

“The focus now needs to be on delivering an effective Scottish jobs guarantee scheme that helps firms create opportunities for young people, while also supporting their existing workforce,” she said.

The UK Government has provided support for employers to protect jobs under the furlough programme. However, this is due to finish at the end of October.

Last week the Scottish Government announced a £100m funding package to support employment and training, with £50m to be set aside to help young people into work.

CBI Scotland found headcounts in the industrial sector fell at the fastest pace since April 1999 in the quarter to July, although employers expect the rate of decline to ease in the next three months. Firms expect to increase investment in training and innovation in the next year.

READ MORE: Whisky giant performs better than expected

Sentiment improved slightly in the latest three months following a record fall in confidence in the quarter to April.

Investment in buildings and in plant and machinery is set to decline, but to a lesser extent than in the latest quarter

Domestic orders are expected to begin to recover in the quarter to October. The pace of decline in export orders is expected to fall.

Domestic orders fell at a record rate in the quarter to July. Exports also fell sharply.