Company directors in Northern Ireland have said business optimism has slipped to its lowest levels in three years due to a slowdown in orders and a further weakening in export markets.

The Institute of Directors' latest business opinion survey for the UK, which includes its Northern Ireland members, shows that company performance has slipped in the third quarter of the year.

Although the survey found that the majority of directors said their companies were still performing well, there is a consensus that difficult trading conditions are now taking their toll on company performance.

Part of the survey was conducted during the period following the terrorist attacks on the United States and according to the Institute of Directors may reflect a downturn in confidence among company directors because of this attack.

Overall the latest survey shows that total order books and export order books remain weak which the institute believes could suggest further slowdown.

Company directors reported that price pressures remained weak but costs have increased, leading to a squeeze on margins.

Overall, however, the manufacturing industry in Britain continues to under-perform the general economy.

But there may be signs of an improvement in the manufacturing sector according to statistics for June to September.

Mr Eric Bell, chairman of the Institute of Directors in Northern Ireland, said that although the survey reflects certain weaknesses, the institute was confident the UK could avoid a full-blown recession.

Mr Bell said the institute is confident that the Bank of England would cut interest rates again if necessary.