SME orders and output continue to fall - CBI survey
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Small and medium-sized manufacturers saw domestic and export orders fall in the three months to January, while production also contracted for the third consecutive quarter. However, the CBI expects both domestic orders and output to increase in the coming three months.
The CBI's latest quarterly SME Trends Survey showed that total new orders fell slightly for the second quarter running, driven by falls in domestic and export orders.
However, SMEs expect total new orders to grow over the next three months, probably driven by anticipated growth in domestic orders. In contrast, export demand is expected to be broadly flat.
In line with falling demand this quarter, output continued to fall, failing to meet expectations of modest growth. However, once again, production is expected to increase next quarter.
With less activity over the last three months, numbers employed in the sector fell slightly for the first time in three years. But SMEs anticipate an increase in headcount in the next quarter.
Anna Leach, CBI head of economic analysis (pictured), said: "Activity has continued to contract this quarter, with falling production disappointing growth expectations.
"Nonetheless, better news on the domestic front is expected, with output and domestic orders set to rise modestly. But there is little sign of improvement in export prospects, and uncertainty over demand continues to weigh on investment plans."
SMEs remain concerned about export prospects for the year ahead with optimism falling significantly.
Firms' plant and machinery investment intentions for the year ahead turned positive for the first time since April 2012. However, more firms believed that uncertainty over demand would limit capital spending, cited by 64%, the highest since April 2009 (70%).
