Thursday, June 17, 2021

SME manufacturer optimism surges, as growth expectations ramp up

SME manufacturing output held flat in the three months to April but is expected to improve markedly in  the coming quarter,  according to the CBI’s quarterly SME Trends  Survey.

The survey of 260 SME manufacturing firms  saw optimism grow considerably, at the fastest pace in seven years. Sentiment regarding export prospects continued to fall,  although  at a much slower pace than that seen over the past year.

The volume of total new orders grew, reflecting a rise in domestic orders, while export orders were flat.  Employment numbers also ticked up in the three months to April, for the first time in two years.

Next quarter,  output and domestic orders are expected to bounce back, with predictions for output growth at the strongest in the survey’s history (since 1988). However, export orders are set to decline.

Investment intentions  for the year ahead are also much improved. In particular, capital expenditure plans for plant  and machinery turned positive for the first time since mid-2018 and are now at their strongest on record. Investment plans for training & retraining and product & process innovation also improved considerably, with the latter now at its strongest since October 1996.

However, inflationary pressure appears to be building. Average costs ramped up at the fastest pace in ten years, with domestic and export prices growth also picking up. Costs are set to increase further next quarter, and domestic price growth is expected to improve further.

Rising costs are in part linked to continued shortages of raw materials.  The proportion of manufacturers citing  materials or components as a factor likely to limit output over the next three months rose to the highest on  record.  Perhaps linked to this, stock building of raw materials also picked up.

Alpesh Paleja, CBI  Lead Economist, said:  “SME manufacturers are poised for strong growth and are sunnier in their outlook, consistent with the overall picture for the economy over Q2.

“But not all is rosy: companies clearly remain under the cosh, with cost pressures mounting and raw materials shortages persisting thanks to COVID-related supply chain disruption.

“As the end of the reopening roadmap hoves into view, manufacturers need clear guidance from Government on the state of play beyond June, so they can plan, prepare and strengthen their supply chains – ensuring they can continue to operate safely and profitably.”

A message from the Editor:

Thank you for reading this story on our news site - please take a moment to read this important message:

As you know, our aim is to bring you, the reader, an editorially led news site and magazine but journalism costs money and we rely on advertising, print and digital revenues to help to support them.

With the Covid-19 pandemic having a major impact on our industry as a whole, the advertising revenues we normally receive, which helps us cover the cost of our journalists and this website, have been drastically affected.

As such we need your help. If you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs just £33.60 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the storm and continue in our quest to deliver quality journalism.

As a subscriber, you will have unlimited access to our web site and magazine. You'll also be offered VIP invitations to our events, preferential rates to all our awards and get access to exclusive newsletters and content.

Just click here to subscribe and in the meantime may I wish you the very best.

Latest news

Related news

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.