The CBI said its survey of 750 firms found 18,000 manufacturing jobs were cut in the three months to July and blamed the economic slowdown.
It said manufacturing jobs had been cut in London and the South East, the east of England and Northern Ireland.
These areas, and the North West and West Midlands, were more gloomy about possible employment than other regions.
Director-general of the CBI, Digby Jones, said a futher interest rate cut was needed to stimulate the manufacturing sector.
Last week the Bank of England cut interest rates from 4.75% to 4.5%.
"I really don't think this is going to be the end of it," said Jones. "Domestic demand is reducing so quickly and worryingly, one cut is not going to stop the rot. I guess before Christmas we will be seeing another cut of a quarter per cent."
Peter Gutmann, of economic forecasting group Experian, which helped produce the research, said new orders had been undermined by "the slowdown in UK retail sales, continued import penetration and stagnant exports to the eurozone".