Optimism amongst the UK’s smaller manufacturers has surged to its highest level since records began in 1988, according to the CBI’s latest SME Trends Survey.

The new data comes as small and medium-sized manufacturers say that total orders and output rallied in the three months to April.

Numbers employed also enjoyed a sharp boost, and employment is expected to grow at an even stronger pace during the next quarter.

The survey of 366 SME manufacturers showed that domestic orders rose strongly, whilst export orders bounced back from a fall in the previous quarter. Both are expected to see robust growth in the next quarter.

Output grew solidly for the third consecutive quarter, with output expectations for the next three months at their highest level since January 1995.

Firms’ investment intentions for buildings in the year ahead are flat, but spending for plant & machinery remains firmly positive, at its strongest level since July 1995.

Katja Hall, CBI Chief Policy Director, said: “It’s very encouraging to see record levels of optimism among smaller manufacturers, on the back of robust growth in domestic and export orders, and a leap in output levels.

“Hiring is also on the up, and is set to strengthen as we look ahead into 2014.

“As confidence beds in, we need to see more firms exporting their products to high-growth markets across the globe, giving a healthy and sustainable boost to the UK’s recovery.”

Key findings include 39% of firms reporting an increase in total new orders, with 19% saying they decreased, giving a balance of 20%. 33% of firms said output increased and 16% said it decreased, giving a balance of 17%, with growth next quarter predicted to rise to its fastest pace since January 1995 ( 23%).