Britain's smaller manufacturing companies remain stuck in recession, according to new figures from the CBI.

The employers' organisation found that small and medium sized manufacturers experienced a steady decline in orders and output over the last four months.

And expectations of a turnaround in fortunes have been badly dented, says the CBI, causing firms to significantly revise predictions for the next four months.

Twenty-two per cent of SMEs reported total new orders were up over the last four months, while 38 per cent said they were down.

The balance of minus 16 per cent compares with minus 11 per cent reported in April and contrasts sharply with the predicted figure of plus 14 per cent.

On output, 34 per cent recorded a fall compared with 23 per cent experiencing an increase.

The CBI also described the volume of export orders as "weak", though firms do expect orders to stabilise over the next four months.

Simon Bartley, chair of the CBI's SME Council, said smaller manufacturers were "disappointed".

"The recession maintains a tight grip despite the confident expectations of last quarter," he said.

"Orders and output have been declining for 18 months, but firms do expect business to stabilise.

"Smaller manufacturers now anticipate a more gradual and protracted recovery than they had hoped for earlier this year. All UK manufacturers, regardless of size, will be hoping for a sorely needed pick-up in global demand."