THE UK's manufacturing industry is showing encouraging signs after a two-month slump in order books.

The Confederation of British Industry (CBI) said total order books had returned to August's levels and export orders were now at their highest for nearly a year-and-a-half.

The employers' organisation tempered its optimism with a warning that order books remained below normal and that pricing conditions were expected to be tougher in the next three months.

Reporting on its monthly industrial trends survey, the CBI said 37 per cent of the firms polled recorded total order books below normal levels, with 13 per cent above normal.

The balance of minus 24 percentage points compared well with minus 33 in September and minus 40 last month.

Export orders had a balance of minus 27, compared with minus 37 last month, while stock levels had run down to their lowest levels for two years, the report said.

Output was expected to remain steady in the next three months, but prices were expected to fall more steeply.

Douglas Godden, head of economic analysis at the CBI, said: "Manufacturers' orders books are now a little fuller than earlier in the year, justifying the improvement in sentiment picked up in the October survey.

"The firmer global recovery is finally beginning to bolster export orders.

"But conditions facing the manufacturing sector are still tough and are likely to remain so for a good while to come."