MANUFACTURERS are more optimistic about export markets for the first time in a year but this should not be seen as a signal to keep interest rates on hold, an industry body claimed.

The quarterly industrial trends survey by the Confederation of British Industry said 27 per cent of firms were more optimistic about their export prospects for the coming 12 months than in the previous quarter.

This compares with 20 per cent who were less optimistic, and gives a balance of plus seven per cent on the CBI's index.

The figure is a significant improvement on the negative six per cent balance reported in the CBI's last survey, published in October, and is the first increase reported for a year.

However Nick Reilly, chairman of the CBI's economic affairs committee, said the improvement did not alter the CBI's view that interest rates needed to be cut by a quarter point.

"The recent weakening of sterling against the euro and continued growth in Europe should help UK exports," he said.

"But signs of a slowdown in the US could be contributing to the further fall in manufacturers' confidence.

"We believe that a quarter point cut in interest rates would not push inflation above target.

"But, it might boost the confidence of those companies who are reviewing their investment plans."

Support for a cut in interest rates has strengthened among Bank of England economic experts.

The Bank of England yesterday revealed that its Monetary Policy Committee, which sets interest rates, narrowly voted by five to four last month to keep rates on hold at six per cent.

That compared with a seven to two vote in favour of no change at their previous meeting in December, showing there had beengrowing support for a cut in rates among the committee members.