40% of small manufacturing companies cutting staff

Of the 492 small firms surveyed by the CBI in this sector just under 40% axed jobs in the final quarter of 2008 and many believe the first quarter of 2009 will be even more difficult for their company.

Only 7% of the SMEs surveyed took on new employees during the final three months of last year, and over 50% reported a fall in orders, compared to just 13% that experienced an increase in sales.

"The jobs picture among smaller manufacturers has deteriorated markedly since last July in the face of rapidly declining demand for UK-made goods at home and abroad," said Russel Griggs, chairman of the CBI's Small and Medium Enterprises Council.

"Firms are steeling themselves for a very difficult few months with output and orders expected to fall at a record pace in the next quarter."