SMALL and medium sized manufacturers are facing difficult trading conditions but faring slightly better than their larger counterparts a survey showed yesterday.

Export markets, which helped many SMEs out of the last recession, are now barely growing and overall demand is the most sluggish for three years, according to the Confederation of British Industry's quarterly SME Trends survey, carried out ink conjunction with accountants Pannell Kerr Forster.

Mr John Parsons, chairman of the CBI's SME Council, said: "Although this is a discouraging start to 1996, there is room for cautious optimism about the future. Investment plans are holding up, cost pressures are clearly easing and firms continue to find it difficult to raise prices in tough competitive conditions."