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SMEs getting more optimistic

Small and medium-sized companies are feeling their most optimistic since April 2007 following signs that demand for their goods may be stabilising.

Four out of 10 of the firms reported a decline in new orders during the three months to the end of October, but 24% said they had seen a rise, according to the CBI.

The balance of 17% of firms who saw demand for their goods remain depressed was an improvement on the balance of 34% who felt the same way in the previous quarter, while firms also said they expected their orders to stabilise during the coming three months.

This improvement contributed to 9% more firms feeling optimistic about their general business situation, the highest level for two-and-a-half years.

But manufacturing output continued to fall during the quarter, with 35% of firms reporting a drop and only 22% saying they saw a rise, output expectations for the coming three months also remained negative.

Russel Griggs, chairman of the CBI’s SME Council, said: “It is good to see that both small and medium-sized firms feel more positive about business prospects than they have for two-and-a-half years, and hope that orders will stabilise in the coming three months.

“However, current conditions remain challenging for many small and medium-sized UK manufacturers, with orders and output still falling, and uncertainty about demand a major concern.

“Accessing finance remains a particular problem for this size of business, with a record proportion saying it is affecting their ability to invest.”

About 30% of firms also said they had reduced their headcount during the past three months, while only 15% said they had increased the number of staff they employed.

This was posted in Bdaily's Members' News section by Ruth Mitchell .