A fifth of small manufacturers have begun to experience an increase in orders and sales, according to a recent survey by UK lobby group, the Forum of Private Business (FPB).

As well as an upturn in current business, the survey found that almost 50 per cent of businesses expect to see an increase over the next 12 months and over a third expect to recruit new staff by September 2010.

Around 22 per cent of small manufacturers are in the process of reducing costs associated with staffing. Another 13 per cent expect they will still be doing so in three months’ time, nine per cent think they will still be making cutbacks in six months, while four per cent of small businesses in manufacturing anticipate they will still be doing so by this time next year.

In addition, five per cent of the companies surveyed said that they are already taking on new staff, while 13 per cent expect to be doing so in six months’ time and 39 per cent believe they will do so before September next year.

However, the survey found that despite relative optimism, there was widespread concern over access to finance. 78 per cent of respondents said that the terms of conditions of lending had worsened in 2009, while the remainder believe that there had been no change in the situation.

When asked to provide suggestions about how the issue of finance for small businesses could be improved, 39 per cent of respondents said that the cost of credit should be reduced. Access to impartial financial advice followed closely behind as the second most popular solution.

Phil McCabe, FPB spokesman, said: 'There has been much debate recently over the current condition of the manufacturing industry, with some research suggesting an upturn in its fortunes but other figures suggesting production has slowed.

‘Our figures appear to show that many smaller manufacturers are indeed seeing an increase in business and are generally optimistic for the future, which has got to be welcomed. However, the lack of available and affordable credit remains a huge problem for the sector and we would urge the banks and major lenders to do everything they can to help manufacturers at this crucial time.’

Phil Orford, chief executive at the FPB, added: ‘These figures show that, while things are certainly still very tough for many small businesses, there is a feeling that we are perhaps through the worst of it and things should soon start to improve.

‘However, a lot of our members are still reporting crippling problems in accessing finance and there is a fair amount of animosity towards the banks over the issue. Ironically, as the economy picks up, this situation could actually get worse as smaller firms find they are unable to get the credit they need to keep up with their order books.

‘The FPB has consistently urged banks to ease restrictions on lending to small businesses and assess each application on a case-by-case basis, rather than classing entire categories or sectors as being too risky to lend to. I would repeat those calls and hope to see desperately-needed credit begin to flow more freely as we head out of recession.’