Industry has lost another 25,000 jobs over the past three months, making 106,000 over the year, as manufacturers sought to protect their profit margins from rapidly rising costs and sagging demand in the home market.
These bleak conclusions from the CBI's quarterly Industrial Trends Survey confirm findings from National Statistics last week
that industry faces the most severe squeeze for 30 years between the prices its pays for its fuel and raw materials and the prices it can charge its customers.
Despite that, industrialists are perceptibly less glum than they were three months ago about the general outlook for business.
Pessimists outnumbered optimists by 14 per cent of the total sample this month. In October the adverse balance was 21 per cent.
Those describing their overall order books as "below normal" outnumbered those saying they are "above normal" by the biggest adverse balance since August last year.
With export orders, though, the trend looks more encour-aging. The adverse balance of minus ten per cent is a marked improvement on October's minus 28 per cent, and the least bad finding for more than a year.
"Conditions for manufacturers are getting increasingly tough as costs continue their seemingly inexorable rise but weak demand keeps prices down, squeezing already thin profit margins even further," said Ian McCafferty, the CBI's chief economic adviser.
"The sustained high level of oil and sharply increased gas prices have driven up energy and raw material costs and manufacturers are continuing to respond by cutting employment to curb the wage bill and boosting investment in efficiency-improving measures.
"Economic growth remains below par, partly because of the slowdown in consumer spending, and this has continued to hit manufacturers' domestic order books although exports are slightly more healthy.
"Investment intentions are also very weak and what is clear from the survey is that manufacturers have very little cause for optimism."
Output continued to fall, though at a slower pace than in the October survey - the majority saying they had cut the volume of their output in the latest three months fell to six per cent from 13 per cent.
Stocks have been creeping up, though. A balance of 19 per cent described theirs as more than adequate to meet demand, up from 13 per cent in October and the biggest percentage for more than a year.
More industrialists responding to the survey - 84 per cent - cited orders and sales as the most likely constraint on their output than at any time since January, 2003.
Only ten per cent pointed to shortage of skilled labour and 13 per cent to a lack of plant capacity.
Similarly with factors likely to limit capital spending over the coming year, uncertainty about demand loomed largest, rated by 55 per cent and the prospect of an inadequate return on the investment by 49 per cent.
Only 27 per cent said they expect to invest to expand capacity, while 65 per cent intend to improve efficiency.
Fragile confidence continues to weigh down on investment intentions, the CBI noted.
Investment generally is expected to decline over the coming year, though that applies more strongly to plans for new buildings rather than plant and machinery.