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Small manufacturers find optimism

Small manufacturers are displaying more confidence in growth, despite another a disappointing quarter.

According to the CBI SME Trends Survey, there was a fall in orders and output in the three months to April, but manufacturers remained hopeful of growth in the next quarter.

Employment in the sector gradually increased over the quarter, a trend that was expected to continue.

Elsewhere, both domestic and export price inflation were broadly the same quarter-on-quarter, but growth in average unit costs was the fastest since October 2011, squeezing manufacturers’ profit margins once again.

Pressure on margins will persist in the coming quarter, with domestic prices expected to rise only slightly, and exports to be flat, against a backdrop of strong cost inflation.

Stephen Gifford, CBI director of Economics, said: “It’s been another disappointing quarter for small and medium-sized manufacturing firms, who have seen new orders and output continue to fall.

“Nonetheless, firms do expect to raise output a little in the coming three months. The recent weakening in Sterling will have boosted the competitiveness of the UK’s smaller manufacturing firms, with a strong pick-up in export orders predicted.

“But conditions will remain challenging for the sector. Fears about the impact of political and economic conditions abroad on export demand have risen and there is little sign in this survey that credit conditions are improving.”

This was posted in Bdaily's Members' News section by Tom Keighley .