Slower demand at home and overseas was hitting order books, with responses on domestic orders turning negative for the first time in ten quarters. The drop in export orders was not limited to sluggish demand in crisis-hit Eurozone economies, the lobby said.
The findings by the EEF, which said it now expected manufacturing output to contract by 1.5 per cent in 2012 before rebounding by 1.5 per cent in 2013, chime with other surveys such as the Purchasing Managers' Index (PMI).
Later today, the PMI for August is expected to show a fourth month of contraction.
The government has been hoping that export-driven growth in manufacturing would help to move the economy away from its dependence on consumer spending, but production has been shrinking since last summer and the country is in recession.
The EEF survey showed that the balance of responses on output over the past three months fell to its lowest level since the fourth quarter of 2009 and the orders balance was the weakest since the first three months of 2010.