But SMEs are more upbeat about performance over the next quarter, with both domestic and export orders set to grow. That’s according to the latest CBI SME Trends Survey.
The survey of 426 firms shows that optimism regarding the business situation stabilised over the quarter and the volume of output rebounded with growth set to accelerate further in the quarter to April. Optimism regarding export prospects for the year ahead improved, but average export prices suffered their sharpest fall since October 2000.
SMEs reported steady employment growth, and over the next 12 months, more manufacturers plan to increase investment in training and product innovation.
Rain Newton-Smith (pictured), CBI economics director, said: “It’s encouraging to see smaller manufacturers’ optimism and orders stabilising, although the picture remains fairly flat across the board with many firms treading water.
“But there are expectations that domestic orders and exports growth will pick up in the next quarter and many smaller manufacturing firms also plan to invest more in their staff training.
“Global growth prospects remain under the spotlight and while selling prices have fallen, it remains to be seen whether the next three months can match the more positive outlook of smaller manufacturers.”
Around a quarter (24%) of SME manufacturers said they were more optimistic, while 25% said they were less optimistic, giving a balance of -1%, up from -8% last quarter. Almost a third (30%) said their volume of output was up, and 23% said it was down, giving a balance of +8%. Companies expect output growth to pick-up in the next quarter (+20%).
Althjough 23% said their domestic orders were up, 25% said they were down, giving a balance of -2%, with the expectation of stronger orders growth next quarter (+14%).
A fifth (21%) said export orders rose over the past three months, 25% said they fell, leaving a balance of -4%, a much slower fall than the previous quarter (-35%). Firms anticipate export orders to grow over the three month to April (+11%).
Firms’ optimism about their exports prospects for the year ahead rose significantly (+13%), compared with a fall (-14%) in the last quarter. And 24% of small manufacturers are employing more people than three months ago, and 17% less – leaving a resulting balance of +7%.
