The Confederation of British Industry's March industrial trends survey shows total demand for manufactured goods remains severely below par.

But it also found conditions are improving, with demand at its highest levels since last August.

Export orders weakened, while manufacturers said they expected continued low prices for goods.

Sudhir Junankar, the confederation's associate director of economic analysis said: "Manufacturers' total orders have continued to improve from the low point last autumn.

"However, export orders were hit by the strengthening in sterling over the past month, and manufacturers also faced some difficulties in some overseas markets."

He said there was a "ray of hope" in that the downturn may be less severe this year than manufacturers had earlier feared.

"We believe that a further half percentage point cut in interest rates next month is the right policy and will not jeopardise the Government's inflation target," he added.

The survey found 47 per cent of manufacturers said their order books were below normal and 13 per cent above normal, giving a negative balance ff 34 per cent.

February's balance was minus 35 per cent an improvement on January's which was minus 43 per cent.

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