Exports steady for SMEs

Posted on 1 Feb 2010 by The Manufacturer

Export orders are stabilising but overall demand remains weak, according to the latest SME Trends Survey released today by the Confederation of British Industry.

Conducted among UK manufacturers with less than 500 employees, the survey found exports registered a balance of +2 per cent (27% up, 25 % down) in the last quarter which is its best balance since January 2008 (+12%). Firms expect exports top now grow both in the coming quarter (+8%) and throughout the year (+15%).

Domestic orders are still suffering though (-10%) and firms expect this trend to continue again next quarter (-7%). Total new orders are expected to fall (-4%) and production which this month stabilised with +1 per cent is likely to follow suit (-6%).

“Smaller manufacturers have been pinning their hopes on the relative weakness of Sterling to boost overseas orders and offset weak demand at home,” said Russel Griggs, chairman of the CBI’s SME Council. “It is therefore encouraging that exports are now stabilising.”

He pointed out that export prospects for this year are now at their highest for fifteen years.

However, “conditions will still feel pretty challenging for smaller firms,” he warned. “Domestic orders are likely to remain depressed, and firms are expecting output to fall in the next three months.”

Earlier today the latest CIPS/Markit Purchasing Managers’ Index registered its best reading in 15 years and exports were again cited for the improved performance. However, CIPS (Chartered Institute of Purchasing anmd Supply) intonated that larger firms are faring better than smaller ones and this sentiment appears to be backed up by the CBI’s findings. While the PMI reports a slight rise in employment, the SME Trends Survey finds small firms are still reducing their headcount (balance of -8%).

Sixty-six per cent of SME manufacturers are now working below capacity.

The SME Trends Survey was completed by 418 firms.