SMEs optimistic despite disappointing 2nd quarter

Posted on 5 Aug 2013

For the first time since April 2012, UK SMEs are showing optimism about their prospects, according to a CBI survey.

Despite weak activity over the past quarter (total new orders continued to fall in the three months to July, with exports being particularly disappointing), over the next three months output is expected to stabilise and new orders are expected to contract at a slower pace.

Investment plans for the year ahead are broadly unchanged, although both internal and external finance constraints eased a little. Optimism around export prospects for the next 12 months rose more slowly than in the previous quarter, as manufacturers remained concerned about political and economic conditions overseas.

Anna Leach, CBI head of economic analysis, said: “Despite another disappointing quarter for small and medium-sized manufacturers, with output continuing to fall, optimism about the general business situation has risen for the first time since spring last year.”

Sentiment about the general business situation rose by 9%. Manufacturers expect growth in total new orders (+9%), domestic orders (+5%) and export orders (+5%) over the next quarter.

Leach continued: “Firms expect demand to improve both at home and abroad and production to stabilise over the next three months. However, they remain concerned about the impact of political and economic conditions overseas on external demand.”