Small manufacturers buoyant

Posted on 7 Feb 2011 by The Manufacturer

Output and employment is rising at Britain's small manufacturers, according to the CBI's latest SME Industrial Trends.

Strong demand from both at home and abroad has contributed to the increased work flow over the last three months.

Consistent with other recent surveys, including the Purchasing Managers’ Index, though, firms reported that a rise in output has been tempered by inflationary pressures which are weighing down on profits. Companies have had to raise their prices as a result.

Still, a +10% balance of companies increasing headcount to handle bulging order books is the highest rise since April 1995.

Lucy Armstrong, Chairman of the CBI’s SME Council, said: “Manufacturing is one of the few bright spots in the economy and this survey underlines the important role of smaller firms in delivering growth and jobs.”

Looking ahead, small manufacturers largely see more of the same over the next three months. Output is expected to rise further, as is demand, but input prices – and thus output prices – are expected to climb further still.

A positive balance of firms expect to invest more in plant and machinery, product & process innovation and training and re-training this year but this will be restricted to some degree by the extra labour costs that will have to be incurred.