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Leap in optimism among smaller manufacturers

OPTIMISM among small and medium-sized manufacturers in the UK has risen in the latest quarter at its fastest pace since comparable records began in 1988, on the back of increases in output, new orders and employment.

The surge in optimism and rise in activity are revealed in the Confederation of British Industry's latest SME (small and medium-sized enterprises) trends survey, published today.

The survey shows a fourth consecutive quarterly increase in optimism among small and medium-sized manufacturers in the three months to April.

Of the 366 firms that responded, 46% said they were more optimistic about their business situation than three months earlier, with only 10% less hopeful and the remainder signalling no change in confidence.

The net 36% of firms experiencing a rise in optimism was the greatest balance reporting such an improvement since records began in 1988, the CBI noted.

The CBI SME trends survey has painted a mixed picture of export orders in recent quarters.

The latest survey shows that with 25% of firms reporting a rise in export orders and 16% recording a fall, a net 9% posted an increase. This is an improvement on a balance of 7% reporting a decline in export orders in the previous quarterly survey. However, the rate of growth in incoming export business in the three months to April was well adrift of the pace of domestic order growth.

A net 18% of survey respondents reported a rise in domestic orders in the latest quarter.

And export orders for small and medium-sized manufacturers have, even with the latest rise, increased in only two of the latest six quarters.

The survey signals a sharp acceleration in the pace of output growth for SMEs in the manufacturing sector in the three months to April.

Of firms surveyed, 33% said output volumes had risen in the latest quarter, with only 16% reporting a decline. The balance of 17% of firms reporting a rise signals a significantly faster pace of increase in output volumes than the previous quarterly survey, in which a net 6% of small and medium-sized manufacturers had reported a rise.

The survey also signals a sharp pick-up in the pace of recruitment by SMEs in the manufacturing sector in the three months to April, with a net 16% reporting a rise in numbers employed.

In the previous quarterly survey, a balance of 4% had reported a rise in numbers employed.

Small and medium-sized manufacturers are projecting further increases in output volumes, new orders, and employment in the coming three months.

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