Small and medium UK manufacturers are feeling the effects of the UK economic recovery, but growth has slowed slightly, according to business group the CBI.

In a survey of 406 smaller factories, the CBI reported demands for goods stronger in the domestic market than from abroad. Domestic orders increased for the fifth quarter in a row while export orders dropped sharply.

But prospects remain rosy. Businesses expect export orders to recover and stabilise in the next three months, while orders from UK customers are also expected to strengthen.

More good news came on the jobs front, with numbers working for small manufacturers rising for the third consecutive quarter and expectations for further employment growth, although at a slightly slower pace.

Rain Newton-Smith, CBI director of economics, said: “It’s reassuring to see smaller manufacturers sharing in the continuing recovery, with optimism, output and jobs all rising over the last three months.

“Sales in the strengthening UK market are looking good but firms are finding export orders much harder to secure. International political instability and weak growth in the Eurozone is holding back overseas demand.

“But, sentiment is still improving and firms expect overall orders and output to expand at a healthier pace over the next three months.”