SMALL manufacturers saw a pick-up in production in the three months to January as domestic demand for UK-made goods improved, said the Confederation of British Industry.

However, the business body found firms were facing strong cost pressures which were feeding through to higher domestic and exported goods prices.

Some 30% of 366 respondents in the CBI’s latest SME Survey reported a rise in output volume while 17% reported a fall.

The overall balance (+13%) was slightly weaker than expected but stronger than the +9% balance in the previous quarter.