SCOTTISH manufacturers and their counterparts in the East Midlands and South-west of England continued to enjoy strong growth in the first quarter of the year, while those in the rest of the UK were having to contend with falling or stagnant output.

This is apparent from the latest regional trends survey produced by the CBI and Business Strategies. CBI associate director of economic analysis Sudhir Junankar attributes this to the uneven effect of the strength of sterling.

In every region except England's South-west, manufacturers saw export orders fall in the four months to April, and a further deterioration is anticipated everywhere except the South-west and Northern Ireland.

But Junankar detected a ''ray of light'' in the recent easing of exchange rates below the three DM level which, he said, should help exports, although a sterling-DM rate of between 2.50 and 2.60 was required to restore UK manufacturing's competitiveness.

While the East Midlands, where 34% more manufacturers reported improved than reduced output, and the South-west (32% more) can thank the aerospace and motor sectors for their relatively buoyant positions, Scotland's 22% positive balance owed more to the food and drink and chemical sectors.

Scottish manufacturers saw a moderate fall in export orders, despite further reductions in export prices and, while more price cuts are anticipated, they are not expected to stem the tide.

Although prices remain the cause of greatest worry to 67% of Scottish exporters, there is growing concern that political and economic conditions abroad might hit demand.

On the upside, Scottish manufacturers have seen a boom in domestic demand as new orders growth accelerated in the four months to April, although total orders are still expected to dip.

An indication of the expected slowdown can be seen in a rise in the number of Scottish manufacturers working below capacity in April. Pessimism may also be contributing to the negative investment intentions.