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Small businesses involved in manufacturing are being hit hard as the sector experiences its deepest downturn for 17 years.

A survey of 600 manufacturing companies by the Chartered Institute of Purchasing & Supply (CIPS) revealed that small businesses in the beleaguered sector were underperforming compared to their larger counterparts.

The CIPS Purchasing Managers’ Index, which indicates the industry is contracting if it falls below 50, showed a slight overall improvement for the month of December, with an increase of 34.3 from 32.2 in November.

However, for small businesses the figure only rose to 33.1 compared to 32.2 the previous month.

Roy Ayliffe, director of professional practice at CIPS, says: ‘While businesses of all sizes have suffered a sharp drop in levels of output, it was the smaller firms that experienced the fastest rate of contraction.’

Ayliffe adds: ‘As bigger companies are reducing their purchases to keep costs down, it is the smaller ones at the end of the supply chain which are being most affected by fewer orders.’

According to CIPS, the overall performance of manufacturing companies during 2008 was the weakest since the survey began in 1992.

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