MANUFACTURERS across the North-East are more optimistic about the future after seeing a pick-up in orders.

The trend echoes a nationwide increase in output, with factory bosses reporting that orders had improved to a level not seen since last March, according to employers' body the Confederation of British Industry (CBI).

It said that while total order books were still below normal, they showed improvement between January and this month, with firms predicting an increase in output over the coming months.

Alan Hall, regional director of manufacturers' organisation EEF Northern, said that at a meeting of North-East business executives the economic condition was described as buoyant.

Mr Hall said: "There was a real mood of optimism. They recognise that the final quarter of the last year was difficult and nobody is saying that they are making pots of money, especially with the rise in energy prices.

"However, they are feeling positive about an upturn in orders and their future business prospects."

The CBI survey for this month found 18 per cent of manufacturers reported their order books above normal and 36 per cent below - a balance of minus 18 per cent.

This is up from minus 28 per cent in January and following an average of minus 26 per cent over the past six months.

Manufacturers now expect modest growth in output over the next three months. Some 33 per cent expect to expand production, while 23 per cent expect a contraction.

The survey found that more firms expect to be able to raise prices than reduce them, although soaring energy costs mean profit margins are likely to be further squeezed.

Liz Smith, assistant reg-ional director of CBI North East, said: "Whilst many manufacturers are facing uncertainties in terms of energy prices and global competition, this latest survey indicates that fortunes might be changing.

"This is good news for the North-East given the importance of manufacturing to our economy - expectations haven't been this positive forseveral months."

Ian McCafferty, CBI chief economic advisor, said: "There is no doubt that UK manufacturers still face a challenging business environment.

"Nevertheless, this survey provides some encouraging news. Demand conditions facing the sector are the best for nearly a year. And if respondents' expectations are realised, the decline in output through 2005 may finally be coming to an end."

Some 785 manufacturers responded to the survey that was conducted between January 24 and February 15.