NORTH-EAST firms are generally optimistic about the future, despite a fall in output and an increase in unemployment.

And the region's exporters are confident that orders will increase, despite a fall in export orders, according to an industrial trends survey carried out by the Confederation of British Industry (CBI) and Business Strategies.

Nationally, the survey reveals that manufacturers are suffering as demand weakens and confidence falls. Across the country confidence is falling or stagnant in most UK regions, with steep falls in the West Midlands, South West and North-West. Only Wales saw a slight rise in business confidence.

In contrast, in the North-East business confidence remained virtually unchanged, despite and expectation that there will be further declines in output and employment in the next four months.

Investment intentions for plant and machinery over the next year remain positive in the region, in contrast with a further fall nationally.

With optimism and demand falling across the country, the CBI is concerned about the prospects for manufacturers in coming months.

"This reinforces our concerns for manufacturers across the UK," said Sudhir Junankar, CBI associate director of economic analysis.

"Upbeat expectations for output in the last survey have not surfaced and production fell in all but two regions of the country."

He said that despite the fall in the strength of sterling in the last few months, manufacturers continue to battle with a strong pound, reflected by the falls in export orders in many of the regions.

"The Bank of England's decision to keep interest rates on hold will have brought a sigh of relief last week," he said.

Employment estimates, based on the survey, forecast jobs in manufacturing falling in seven of the 11 regions in the third quarter this year, including the North-East.