Member Article

Smaller manufactures see strong rise in demand - CBI

The UK’s small and medium-sized manufacturers saw the volume of orders at home and abroad grow at the fastest rate in 16 years, according to research.

The CBI’s latest quarterly SME Trends Survey revealed that volumes of domestic and export orders among smaller firms rose at the fastest rate since April 1995.

Strong demand at home and abroad, coupled with stock rebuilding, helped push up output further.

A balance of +18% of firms said production rose, compared with +13% in the previous quarter.

Lucy Armstrong, chair of the CBI’s SME Council, said:“Smaller manufacturers are enjoying strong demand for goods at home and abroad, underpinning robust growth in production.

“Headcount has increased for the third consecutive quarter as firms try to keep up with demand, and output is expected to rise again in the coming months.

Despite the positive the CBI warned that smaller firms are being squeezed by intense cost pressures.

The CBI said production costs have increased rapidly, weighing on profit margins.

A balance of +53% of firms said average unit costs rose, the highest since October 2008 (+53%) with the rate of growth accelerating from already strong increases over the past year.

That led to sharp rises in average domestic prices (+26%) and export prices (+31%), both in line with expectations. Domestic prices rose at the fastest rate since April 1995 (+32%), and export prices at the sharpest rate since the survey began in October 1988.

She added:“However, inflationary pressures remain a dark cloud, with rising oil and commodity prices pushing up the cost of production and eating into profit margins. Manufacturers have raised output prices rapidly to cope, and expect to continue doing so over the next quarter.”

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