Bumper quarter for smaller manufacturers
Aug 05 2010
“Manufacturers saw a pick up in demand during the past quarter”
Stronger demand and companies rebuilding stocks of goods helped boost production among the UK’s smaller manufacturers during the last quarter.
Of the 403 small and medium-sized manufacturers that responded to the Confederation of British Industry’s (CBI) latest quarterly SME Trends Survey, 41 per cent said output rose in the three months to July, while 20 per cent said it fell. The resulting balance of +21 per cent is the fastest growth since April 1995 (+25 per cent), and an improvement on the previous quarter (+3 per cent).
Russel Griggs, chairman of the CBI’s SME Council, comments: 'Smaller manufacturers enjoyed a bumper quarter with production ramped up to meet growing demand and to rebuild stocks.
‘Exports are leading the charge, reflecting the pick-up in global trade and the relative weakness of sterling, but firms are still seeing their profit margins squeezed because of rising costs.’
The rise in output was driven by strengthening demand at home and abroad. Thirty-seven per cent of firms saw the volume of total new orders increase during the quarter, while 24 per cent witnessed a decline, giving a balance of +13 per cent. That is the fastest growth since July 1995 (+17 per cent).
Exports were particularly strong, with a balance of +22 per cent of firms reporting a rise in the volume of overseas orders, the fastest growth since April 1995 (+35 per cent). Meanwhile, domestic orders saw more modest growth (+6 per cent). With demand improving, firms also started re-building stocks, which also contributed to the strong rise in production.
Looking ahead to the next three months, the reports states that firms anticipate a slight fall in output (-5 per cent), as the trends in domestic and export orders are expected to weaken, by a balance of -5 per cent and -3 per cent respectively.