Deteriorating outlook for SME factories

Julian Harris
Follow Julian
THE OUTLOOK for small and medium sized manufacturers is increasingly bleak, according to figures released today by employers’ organisation the CBI.

Factories expect no growth in orders and for stocks to whittle down in the coming three months, with output set to fall.

“Small and medium-sized manufacturers have seen domestic demand flat-lining in the past three months, and will have been particularly disappointed by an unexpected fall in export orders,” commented Lucy Armstrong of the CBI.

A negative balance of minus eight per cent of respondents indicated that export orders fell in the three months to October. Domestic orders were flat, according to the survey.

The poor figures have hammered sentiment in the industry, with morale collapsing at its fastest rate since April 2009. It was also the first time since April 2009 – the peak of the recession – that sentiment over exports has dropped.

“A balance of minus 26 per cent of firms reported that they were less optimistic than three months ago,” the report said. “Sentiment about export prospects also deteriorated (minus 19 per cent).”

Employment at small and medium sized (SME) factories has continued to grow despite weakening economic conditions, with a positive balance of 16 per cent reporting an increase in headcount for the three months to October.

Yet the impending squeeze is set to reduce manufacturing job opportunities, with only a small positive balance (four per cent) expecting to increase headcount over the next three months.

“Investment intentions for the year ahead have not improved,” Armstrong added, “with firms still planning to spend less on buildings (minus 20 per cent) and plant and machinery (minus nine per cent) relative to the previous twelve months.”