Small businesses in the manufacturing industry are growing steadily, but they need to focus on exports for the long-term health of the sector, according to the CBI.

The business group said domestic orders and output grew in the three months to January 2015, but export orders were broadly flat, owing partly to tepid growth across the eurozone.

Domestic orders have grown for six successive quarters, showing that UK sales are solid. But manufacturers were broadly more optimistic about prospects for overseas sales this year as well.

Despite fears of the health of the EU economies, which are at their highest for nearly two years, the research showed expectations for a modest increase in export orders.

Rain Newton-Smith, CBI director of economics, said: “Smaller manufacturers are continuing along a steady growth path, with domestic orders and output both rising at a healthy pace.

“The sharp fall in the oil price should also help, pushing down the cost of production and raw materials for firms.

“But stagnant export orders are dragging on the sector’s performance, mainly because of the sluggish recovery and growing uncertainty in the Eurozone.

“Quantitative easing should inject some new life into Eurozone economies but it won’t be a miracle cure and businesses will have a close eye on Greece, as the new government sets out its agenda.”

Firms continued to create more jobs in the three months to January although the rate of jobs growth slowed for the second quarter in a row. Small manufacturers also said they planned to invest more in plant and machinery during the next 12 months.