WIREDGOV

​Small and medium-sized manufacturers continue to report increases in total domestic orders, output and numbers employed in the three months to April, but exports continue to drag on growth. That’s according to the latest CBI SME Trends Survey.

The survey of 426 firms shows that domestic orders increased for the seventh quarter running, while export orders were broadly flat. Domestic orders are expected to rise at a faster pace next quarter, but export orders are set to remain broadly flat with manufacturers less optimistic about their export prospects for the year ahead. Prices were cited as the main limiting factor on exports.

The volume of output rose this quarter, with manufacturers anticipating an even faster pick-up next quarter. With inflationary pressures low, both average unit costs and domestic prices were broadly flat, the latter for the third quarter running, and export prices continued to fall.

Firms continued to create more jobs in the three months to April, with the rate of growth remaining above average. Employment in the sector is expected to grow strongly once again over the next quarter.

Katja Hall, CBI Deputy Director-General, said:

“Smaller manufacturers are reporting solid increases in output, orders and jobs. While growth was a little slower this quarter, they expect a pick-up in activity in the next three months.

“However, prospects for exporting to the rest of Europe remain a concern. Sterling’s recent rises against the Euro may mean more money in the back-pocket of holidaymakers, but it makes it that bit tougher for British manufacturers to stay competitive and sell inside the Eurozone.

“Business will also be keeping a close eye on how the Greek situation develops in the coming weeks.”

Key findings – three months to April

• 23% of small & medium sized enterprise (SME) manufacturers said they were more optimistic, while 19% said they were less optimistic, giving a balance of +4%, down from +14% last quarter
• 27% said their volume of output was up, and 22% said it was down, giving a rounded balance of +5%. Companies expect output growth to pick-up in the next quarter (+13%)
• 32% said their domestic orders were up, while 24% said they were down, giving a balance of +7%, with the expectation of stronger orders growth next quarter (+15%)                      
• 25% said export orders rose over the past three months, 28% said they fell, leaving a balance of -3%, the same result as the previous quarter. Firms anticipate broadly flat export orders again in the next quarter (+1%)
• Firms’ optimism about their exports prospects for the year ahead fell slightly (-5%)
• However, the number of SME manufacturers raising concerns about political and economic conditions abroad affecting export orders fell to 15% - the lowest since January 2008, and broadly matching its level this time last year.
• But prices as a factor likely to limit export orders rose (to 59%) to its highest since July 2008 (63%) – however, it remained in line with its long-run average.
• 29% of small manufacturers are employing more people than three months ago, and 12% less. The resulting balance of +17% compares with +12% in the three months to January
• The balance for employment expectations over the next three months is +10%
• Firms are planning to keep spending on plant and machinery broadly unchanged (-1%) and to reduce buildings spend (-6%) over the next twelve months. However, investment intentions are above their long-run averages (-7% and -17% respectively).
• Average unit costs and domestic prices were both broadly flat over the three months to April at 0% and +1%, respectively. Export prices fell further (-17%) , at the fastest pace since October 2003.