Small manufacturers report fourth consecutive quarter of growth

Domestic orders and output both rose strongly, for the fourth consecutive quarter, and are expected to grow robustly again in the next three months. Numbers employed in the sector shot up in the last quarter, recording the fastest pace of increase since records began (October 1988). Firms' optimism about their general business situation also rose, but to a lesser extent than in the last quarter. However, despite the rise in export optimism, export orders were broadly flat in the three months to July, disappointing expectations for a strong increase. Nevertheless, firms expect export growth to pick up next quarter. 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 (pictured), 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." Just over a third (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%). Just under a third (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%). About a fifth (18%) of firms said export orders rose, while 20% said they fell, giving a balance of -2%, disappointing expectations of strong growth (+25%). Export order growth is expected to pick up next quarter (-2%).