Stronger demand and companies rebuilding stocks of goods helped boost production among the UK's smaller manufacturers during the last quarter, according to the Confederation of British Industry's (CBI) latest quarterly SME Trends Survey.

Just over 40% of small firms surveyed by the CBI said output rose in the three months to July compared to 20% that said it fell. The resulting balance of +21% is the fastest growth since April 1995 (+25%), and a marked improvement on the previous quarter.

'Smaller manufacturers enjoyed a bumper quarter with production ramped up to meet growing demand and to rebuild stocks," said Russel Griggs, chairman of the CBI's SME Council.

"Exports are leading the charge, reflecting the pick-up in global trade and the relative weakness of sterling, but firms are still seeing their profit margins squeezed because of rising costs."

Looking ahead to the next quarter, the report states that firms anticipate a slight fall in output, as the trends in domestic and export orders are expected to weaken.