Optimism up but orders down for SME manufacturers – CBI

In stark contrast to the more optimistic picture for the industry at large from last week's Markit/CIPS Purchasing Manager's Index (PMI), the CBI's latest SME Trends Survey shows new orders continuing to fall, again dampening expectations for growth. The survey shows domestic orders were static, while export orders were particularly disappointing. Prospects for the quarter ahead are a little better, with output expected to stabilise and new orders expected to contract at a slower pace. Nevertheless, manufacturers have tempered their expectations for output growth in the quarter ahead to the lowest in a year, following successive disappointments. Meanwhile headcount is expected to fall slightly, following a year when headcount has been close to flat. CBI head of economic analysis Anna Leach said: "Despite another disappointing quarter for small and medium-sized manufacturers, with output continuing to fall, optimism about the general business situation has risen for the first time since spring last year. "Firms expect demand to improve both at home and abroad and production to stabilise over the next three months. But manufacturers remain concerned about the impact of political and economic conditions overseas on external demand, reflecting on-going uncertainty about the global economic outlook."