LONDON, April 25 - Britain's manufacturing sector is being hit by theslowdown in the U.S. economy, with orders weakening and output and businessconfidence falling, a report from employers' group the Confederation of BritishIndustry (CBI) published on Wednesday showed. The quarterly survey found domestic orders fell over the past four months at thefastest rate since July 1999. The report found 30 percent of firms reported lowerdomestic orders, and 16 percent a rise, giving a balance of minus 14 percentcompared with minus three percent in January and minus eight percent lastOctober. Over the next four months, firms expect domestic orders to fall at the fastest ratesince January 1999. They also expect export orders to fall further, having declinedover the past four months at the fastest rate since July 2000. "Manufacturers are clearly facing difficult times. The last survey suggested a smallstep forward, but now we seem to have taken two steps backwards," said NickReilly, chairman of the CBI's economic affairs committee and managing director ofVauxhall Motors. "We are not in the same position as the U.S., and the UK economy remainsfundamentally strong. But we do need a quarter-point rate cut to limit thedownturn," Reilly said. The Bank of England Monetary Policy Committee cut interest rates by 25 basispoints to 5.5 percent on April 5 and is under pressure to cut again next month afterlast week's surprise half-point cut by the U.S. Federal Reserve. The number of firms working below capacity rose to 64 percent, significantlyabove the long-term average. Domestic prices fell at their slowest rate since April 1998. But firms had expectedprices to rise and they now forecast further reductions. Unit costs were unchangedover the past four months, suggesting a further squeeze on profit margins. Thesurvey was conducted between March 22 and April 10.