BUSINESS for manufacturers in Yorkshire is still on the up.

The EEF Yorkshire and Humberside, which represents 400 of the region's manufacturers, says that for the fourth quarter in a row its members are reporting more orders - and the extreme pressure on prices has eased a little.

However, it warns that the recovery remains fragile.

The EEF's quarterly survey indicates that in spite of the improving picture on orders, manufacturing output fell back slightly during the first quarter of 2004 after some encouraging improvement towards the end of last year.

Looking ahead, however, few companies expected a continued decline, and most expected greater improvement and stability.

Ian Hughes, director of EEF Yorkshire and Humberside, said further improvements were expected but emphasised that survey responses had historically tended to be over-optimistic.

He said: "More than half the companies report stable employment levels, although of the remainder, slightly more reduced employment than increased it. We expect the picture to remain stable."

On the easing pressure on prices, Mr Hughes said his members were expecting - or perhaps hoping for - further improvements.

"However, margins are still tight, and companies are not out of the woods yet.

"Cashflow is not looking too healthy for many, and although prospects for capital expenditure are a little brighter, the overall picture on investment is still one of cutbacks rather than growth.

"It was therefore disappointing to see little help on this score from Chancellor Gordon Brown in last week's Budget."

Updated: 11:31 Friday, March 26, 2004