Optimism Up for SME Manufacturers

Optimism in the three months to July rises for the UK’s small manufacturers but the underlying activity still remains weak, says the CBI

CBI quarterly SME Trends Survey July 2013The latest quarterly SME Trends Survey from business organisation, the Confederation of British Industry (CBI) points to the first rise in optimism amongst small and medium-sized manufacturers since April 2012.

However, problems still exist in the sector with the CBI’s report highlighting a continued fall in new orders and disappointing export orders, down for the fifth consecutive quarter in a row.

Fall in demand for British-made goods was matched by another slight fall in manufacturing output.

In other areas, cost growth slowed after a pick-up in the last quarter, easing the squeeze on margins, however, the pressure from cost growth continues to outpace output price inflation.

Economic Outlook for the Rest of 2013

Looking ahead, the CBI predict that the contraction in new orders will slow, output will stabilise and headcount may decrease slightly, having remained relatively flat.

On the finance front, firms’ plans for investment seem to remain unchanged with financial pressures appearing to ease.

The manufacturers questioned for the CBI’s survey are still intending to spend as they did in the previous quarter except that they will be spending less on buildings and investing a little more in plant & machinery.

The good news for manufacturers though is that there is a clear intent to invest in innovation with spend on product and process innovation looking to increase by around 15% whilst investment in training is expected to rise by about 9%.

As for exports, growth prospects have slowed with British manufacturers continuing to hold concerns about both economic and politicial issues overseas. On balance, with 26% of firms seeing a fall in export orders and 22% experiencing an uptick, exports appear to be down by 4%.

Whilst slightly downbeat performance and expectations for the sector remain but, as stated, this outlook is tempered when optimism as a whole does appear to be on the increase.

Anna Leach, the CBI’s Head of Economic Analysis, said of the latest SME Trends Survey:

“Despite another disappointing quarter for small and medium-sized manufacturers, with output continuing to fall, optimism about the general business situation has risen for the first time since spring last year.”

“Firms expect demand to improve both at home and abroad and production to stabilise over the next three months. But manufacturers remain concerned about the impact of political and economic conditions overseas on external demand, reflecting on-going uncertainty about the global economic outlook.”

See the latest figures in the CBI quarterly SME Trends Survey July 2013.

If you’re looking for help with growing your business see our Get Britain Growing section, particularly the UKTI services that can help you to grow your exports, a series of articles that point to sources where you can grow through innovation and the organisations that assist with your manufacturing growth.

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