Rising energy costs are burning a hole in manufacturers' profits

The CBI Regional Trends Survey said the recovery was driven by growth in export orders, while UK demand was static.

Its comments came as official figures showed UK manufacturing output grew by 0.6% in the second quarter compared with the previous three months.

However, output during June grew by a lower-than-expected 0.1%.

The wider industrial output measure dropped by 0.1% in June, the Office for National Statistics said, as a result of maintenance work in the oil and gas sectors.

Job losses predicted

The CBI said the recovery seen during the past three months was smaller than expected and followed what it described as "18 months of weakness".

Domestic orders remain stubbornly flat and this, together with import penetration, is constraining the strength and sustainability of the recovery Dimitri Gunawardena, Experian

But firms across the UK were more positive than they had been in two years about the prospect for export orders, and they expected UK demand to show modest growth as well.

Manufacturing output fell in the East Midlands and Northern Ireland, but other regions performed better - particularly north-west England and Scotland where output was "strong".

Elsewhere, the trends survey found that rising energy prices and other costs were keeping margins under pressure.

Credit reference agency Experian, which helped conduct the survey, said it expected the UK manufacturing industry to lose 23,000 jobs in the three months to the end of September.

"There is welcome evidence in the survey results that the UK manufacturing sector is at last benefiting from a buoyant global backdrop," said Experian economist Dimitri Gunawardena.

"But domestic orders remain stubbornly flat and this, together with import penetration, is constraining the strength and sustainability of the recovery."