A surprise pick-up in demand from overseas failed to take the heat off manufacturers yesterday after it emerged order books continued to suffer.
The CBI's Industrial Trends Survey found manufacturers reported a fall in new orders for the third successive quarter, although the decline was less severe than previous quarters after a rise in export orders.
Domestic demand remained weak while the industry lobby group said business sentiment fell for the fourth consecutive quarterly survey.
The study comes just days after the sector was confirmed to be in a technical recession, following two consecutive quarters without growth.
The CBI said its findings "reinforced the case" for the Bank of England to cut interest rates on August 4 - a move most analysts view as a certainty.
The breakdown of yesterday's study shows 31 per cent of firms saw volumes of total new orders decrease over the past three months, while 24 per cent saw an increase.
The balance of minus seven per cent is better than the minus 18 per cent seen in the previous quarter, but still disappointing given expectations for a slight increase.
Firms continue to be pessimistic about prospects. Expectations for order books in the next three months are at their lowest since July
Amid declining confidence, the CBI said investment intentions were weak with spending on plant and machinery expected to decline in the coming year.
One of the few positive notes came from overseas after it emerged that 29 per cent of firms saw an increase in export orders over the past three months, with 20 per cent reporting a fall. This is the first rise in new export orders for 15 months, and the fastest rate since October 1995.
CBI chief economic adviser Ian McCafferty said: "While demand from abroad has helped manufacturing activity to hold up over the past three months, developments here in the UK have kept the sector under significant pressure. These results reinforce the case for a cut in interest rates."