Fourth consecutive quarter of growth for small manufacturers

Nick Elvin

Small and medium-sized manufacturers have reported another strong quarter of orders and output growth, according to the CBI’s SME Trends Survey. 

Domestic orders and output both rose strongly, for the fourth consecutive quarter, and are expected to grow robustly again in the next three months.

In addition, numbers employed in the sector went up significantly in the three months to July – the fastest pace of increase since records began in 1988. Firms’ optimism about their general business situation also rose, but to a lesser extent than in the last quarter.

And although export orders were broadly flat, firms expect export growth to pick up next quarter. Furthermore, smaller manufacturers plan to increase their investment in plant and machinery over the next year, while their expenditure on buildings is expected to stay broadly the same as last year.

Katja Hall, CBI deputy director-general, said: “Smaller manufacturers are settling into a regular growth pattern, with their order books and output growing for the fourth consecutive quarter. Firms remain upbeat about their business situation and they are hiring at their fastest rate since 1988.

“But export orders have underperformed this quarter, which may in part be because of the strength of Sterling. 

“We need the Government to get behind our small and medium-sized manufacturers to help them to sell their products and services to new markets around the world, giving a sustainable boost to long-term growth.”

Selected key findings (three months to July):

• 36% of small and medium-sized manufacturers reported a rise in new orders, while 22% said they fell, giving a balance of +14%. Orders are expected to increase even more strongly next quarter (+26%);
• 31% of firms said that output increased, while 16% said that it decreased, giving a balance of +15%. Output is expected to grow again next quarter (+19%);
• 36% of firms reported a rise in domestic orders, while 19% said they fell, giving a balance of +17%. Domestic orders are expected to grow again next quarter (+24%);
• 18% of firms said export orders rose, while 20% said they fell, giving a balance of -2%;
• 31% of firms said they were more optimistic about their business situation, while 11% said they were less optimistic, giving a balance of +20%;
• 34% of firms said that employment increased, while 9% said that it decreased, giving a balance of +24%.