There has been no relief from the relentless downturn in UK manufacturing, with further falls in orders, output and employment.
The latest CBI Quarterly Industrial Trends Survey of almost 900 firms offers few signs of improvement since the end of the war in Iraq, with orders and confidence still in decline.
Domestic orders fell faster than expected over the last three months and have been declining for over three years. Despite a weakening pound, export orders fell at their fastest rate for 18 months, with almost one in four firms recording a fall. Export orders have now been falling for nearly seven years, the CBI adds.
Output also dropped, with more than two-thirds of companies reporting they were working below capacity.
"Manufacturers have enjoyed little relief in the three months following the end of conflict in Iraq and the downturn in orders appears relentless despite the recent softening of the pound," said CBI chief economist Ian McCafferty.
"Manufacturers' main hope is that a pick-up in the United States later this year helps trigger a gradual recovery in the UK."
Job shedding continued at a rapid pace over the past three months, but at a slightly slower rate than expected.
Companies also continued to cut prices in an attempt to hold on to their markets, with downward price pressure undiminished.
The CBI's survey follows figures for the second quarter of 2003 from the British Chambers of Commerce which painted a "disappointing and worrying" picture of business confidence.
Despite a slight improvement from the first quarter of 2003, many companies polled said business was worse than last year, the report said.
