Regional firms are more optimistic about their prospects than for 18 months, according to a survey to mark the start of Manufacturing Week today.

Research for Yorkshire Forward, the regional development agency, shows 29 per cent of businesses expect the business climate to improve in the next 12 months.

It reveals that 38 per cent of manufacturers expect trading to improve in 2010, with 38 per cent believing it will remain stable.

But a leading European industrialist, whose group has a plant in Bradford, has dampened hopes of a rapid economic recovery. Jurgen Hambrecht, chief executive of BASF, which last year took over Swiss rival Ciba and has a speciality chemicals plant at Low Moor, has warned of persistent over-capacity in developed countries with two more years of flagging growth.

Yorkshire Forward said its research provided evidence of improving market conditions, with 22 per cent of businesses reporting better performance against 15 per cent in June, and fewer seeing a deterioration.

Another survey for manufacturing body EEF said there had been a better than expected recovery in 2010, with orders improving and job losses levelling off.

The Manufacturing Outlook report, published with accountants BDO, reveals a larger than expected improvement in output and orders over the past three months and a return of confidence across manufacturing.

EEF regional director Alan Hall, said: “Having emerged from the recession at the end of last year, the start to 2010 was better than expected. Clearly more companies are becoming more confident about their prospects and we’re beginning to see the real benefits of an export-led recovery.

“But we have to be cautious about predicting a strong rebound, as a number of factors could knock growth off track. The recovery depends on world markets continuing to grow and the financial system’s ability to provide finance is yet to be fully tested.”

Yorkshire Forward said the recovery could be arriving just in time as businesses had been stretched to their limits and there were concerns about the effects of any further downturn. Almost a third of firms feel that they are not well placed to weather another downturn.

Patrick Bowes, YF chief economist; said: “Manufacturers in the region are much more optimistic about business prospects in 2010, especially the “bounce back” in new orders in the UK market.

“We worked hard in 2009 to support businesses to make sure they tap into new markets and it is particularly encouraging that up to 68 per cent now see the development of new markets as their top priority in responding to the upturn in 2010.”