Thursday, November 26, 2020

SME manufacturers see activity plunge – CBI

SME manufacturing output fell at the quickest pace in over a decade in the quarter to April, according to the latest CBI SME Trends Survey.

This sharp fall is largely attributable to the COVID-19 crisis, with over four out of five firms noting that the measures to contain the outbreak had a negative impact on their domestic output.

The survey of 301 SME manufacturers reported that total new orders in the three months to April fell at the fastest rate in seven years. Domestic orders fell at broadly the same pace as the previous quarter, while export orders dropped at their quickest rate since October 2015.

Chiming with weak activity this quarter, business sentiment in the quarter to April dropped by its fastest on record. Export sentiment also fell at a survey-record pace.

Looking ahead, manufacturers expect output to plunge at a faster pace next quarter, marking the weakest expectations on record (since 1988). Both new domestic and export orders are anticipated to contract at a much faster pace next quarter, also constituting the weakest expectations on record.

Investment expectations for the next year for buildings and plant & machinery deteriorated to survey-record lows, as a record high proportion of firms reported uncertainty about demand as a factor to limit future investment.

Headcount in the quarter to April fell at its quickest pace since October 2009. Firms expect employment to fall at a much faster pace next quarter, marking the weakest expectations on record.

Additional questions added to the survey in relation to COVID-19 revealed that:

  • Over four out of five of firms have seen a negative impact on their domestic output
  • Around two-thirds of firms have seen a negative impact on international output
  • Just over half of firms have partially shutdown/closed UK production/activity
  • A little over half of firms mentioned that they temporarily laid off staff, compared with 9% reporting permanent layoffs.
  • Three-quarters of firms faced cash flow difficulties.

Alpesh Paleja, CBI Lead Economist, said: “SME manufacturers are seeing a sharp shock to activity due to the COVID-19 outbreak, with expectations signalling a sharper downturn to come. Nonetheless, manufacturers are doing all they can to support communities and employees during this difficult time.

“The government’s support schemes have been a real lifeline for businesses so far, and they should remain conscious of getting money to those who need it quickly. This will be a critical step to restarting the economy once it is safe to do so, which will require a strong partnership between government and business.”

Key findings:

  • Output volumes in the quarter to April fell at the quickest pace since October 2009 (-14% from -7% in January). Manufacturers expect output to contract at a considerably faster pace next quarter (-73%), marking the weakest expectations on record (since 1988).
  • Total new orders in the three months to April fell at the fastest rate since April 2013 (-13% from -7% in January). Domestic orders fell at a broadly similar pace to January (-9% from -7%), while export orders dropped at the quickest pace since October 2015 (-23% from -1%).
  • Looking ahead, total new orders are anticipated to contract at a much faster pace (-76%), reflected in quicker drops in domestic (-74%) and export orders (-71%). These constitute the weakest expectations on record (since 1988).
  • Headcount in the quarter to April fell at their quickest pace since October 2009 (-14% from -8% in January). Firms expect employment to fall at a much faster pace next quarter (-56%), marking the weakest expectations on record.
  • Business sentiment in the quarter to April dropped by its fastest on record (-81% from +32% in January). Export sentiment also fell at a survey-record pace (-80% from +7%).
  • Investment intentions for the next year worsened across tangible and intangible investment categories. Expectations for buildings (-63%) and plant & machinery (-64%) deteriorated to survey-record lows.
  • The share of firms citing uncertainty about demand as a factor to limit capital expenditure rose to a survey-record high (72%).
  • The share of firms working below capacity rose to its highest on record (76%)
  • The share of firms citing credit or finance as a factor to limit output rose to its highest on record (18%).
  • The proportion of firms citing political/economic conditions abroad as a factor to limit export orders also rose to a survey-record high (72%). Meanwhile, the share citing prices as a factor to limit export orders dropped to a survey-record low (16%).

Additional questions added to the survey in relation to COVID-19 revealed that:

  • 83% of firms have seen a negative impact on their domestic output
  • 65% of firms have seen a negative impact on international output
  • 53% of firms have partially shutdown or closed UK production/activity
  • 52% of firms mentioned that they temporarily laid off staff, compared with 9% reporting permanent layoffs.
  • 75% of firms have faced cash flow difficulties.

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

BAM starts work on three new East Midlands schools

BAM Construction has commenced work on three new schools in the East Midlands, having been appointed to the schemes by the Department for Education...

Accrol completes £41.8m acquisition of Leicester Tissue Company

Accrol Group has completed the £41.8m acquisition of Leicester Tissue Company (LTC), in a deal led by Zeus Capital. Zeus Capital acted as Nominated Adviser...

Coronavirus testing sees revenues rise at Nottingham laboratory services firm

Revenues at Nottingham-based SourceBio International, the provider of integrated laboratory services and products, have risen as a result of Coronavirus testing. Since May 2020, SourceBio...

Gallagher appoints Gareth Parry-Jones to lead the Midlands

Insurance, risk management and consulting firm Gallagher has appointed Gareth Parry-Jones Regional Managing Director of the Midlands. In his new role, Gareth is responsible for...

Fundraising campaign sees PALLITE® raise £1.1m

Northamptonshire-based PALLITE®, a designer and manufacturer of sustainable, paper honeycomb board packaging products used in the logistics industry, has raised over £1.1million on Crowdcube. PALLITE®...

Related news

IoD appoints trio of Ambassadors in Derbyshire and Nottinghamshire

The Institute of Directors has appointed a trio of Ambassadors to its Derbyshire and Nottinghamshire team. Peter Wingrove joins as Mental Health and Wellbeing Ambassador,...

BAM starts work on three new East Midlands schools

BAM Construction has commenced work on three new schools in the East Midlands, having been appointed to the schemes by the Department for Education...

Accrol completes £41.8m acquisition of Leicester Tissue Company

Accrol Group has completed the £41.8m acquisition of Leicester Tissue Company (LTC), in a deal led by Zeus Capital. Zeus Capital acted as Nominated Adviser...

Coronavirus testing sees revenues rise at Nottingham laboratory services firm

Revenues at Nottingham-based SourceBio International, the provider of integrated laboratory services and products, have risen as a result of Coronavirus testing. Since May 2020, SourceBio...

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.

Close