Friday, May 29, 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.

Help us maintain our standards of journalism

Readers across the region enjoy our news site but keeping our news up to date and authoritative, without charging readers to view the site is a challenge. Especially now with the Corona Virus measures affecting us all, as many clients have been severely affected and are naturally reducing their spend on advertisements. Given this lack of revenue stream we are calling on the generosity of our readers to help us fill that void and enable our journalists to continue delivering the news that you enjoy.

Unlike many other news sites, we don't have annoying pop ups or charge scandalous prices for events. We also produce printed magazines for each title and we make these freely available to read on line too, for your enjoyment. Often, people have asked why we don't make a charge for viewers to read these magazines and news stories but we feel that would adversely affect our readership/advertisers response rate. But with advertising revenues now severely affected we need your help. So, if you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs from just £33.60 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the current storm and continue in our quest to deliver quality journalism.

We value your readership and your support, as this enables us to continue to provide our regular daily news updates. We've been established over 30 years, during which we've lost count of the numerous recessions and financial meltdowns, and we intend to weather the storms caused by Covid-19. So, every reader contribution, however big or small, is invaluable in helping us to get through this. Please click here to help support your favourite news site/magazine.






Latest news

Safe working guidelines published for British businesses

BSI, the UK’s National Standards Body, has published new safe working guidelines to help businesses manage a safe return to work and reoccupation of...

Maintaining valuable business relationships at a distance – Fiona Duncan-Steer, founder of RSViP Business Networking Agency

Fiona Duncan-Steer, founder of RSViP Business Networking Agency, discusses the importance of maintaining valuable business relationships at a distance and in times of crisis.  There...

Focus on Future Fund and Statutory Sick Pay in Streets’ latest business update

In this week’s business support e-newsletter, Streets Chartered Accountants provide details of both the Future Fund and the Statutory Sick Pay rebate scheme and...

East Mids sees renewables as key infrastructure investment target

Over half of people in the East Midlands see investment in renewable energy as very important, with investment in airports considered the least important...

Half of workers risking cyber security during remote working

Almost half of office workers have admitted they are less likely to follow safe data practices when working from home, new research had found. The...

Related news

Notts web agency helps over 100k meals be delivered during lockdown

Throughout the COVID-19 lockdown, the owners of Nottingham-based web design agency, Strafe Creative, have been helping to support vulnerable people and the restaurant industry...

Safe working guidelines published for British businesses

BSI, the UK’s National Standards Body, has published new safe working guidelines to help businesses manage a safe return to work and reoccupation of...

Maintaining valuable business relationships at a distance – Fiona Duncan-Steer, founder of RSViP Business Networking Agency

Fiona Duncan-Steer, founder of RSViP Business Networking Agency, discusses the importance of maintaining valuable business relationships at a distance and in times of crisis.  There...

Focus on Future Fund and Statutory Sick Pay in Streets’ latest business update

In this week’s business support e-newsletter, Streets Chartered Accountants provide details of both the Future Fund and the Statutory Sick Pay rebate scheme and...

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