The latest CBI quarterly SME Trends survey has shown a healthy increase in output for small and medium-sized manufacturers, with especially strong demand from overseas.
A balance of +10 per cent of SME manufacturers surveyed had experienced a growth in output during the last quarter, while a balance of +12 per cent achieved an increase in export orders – the strongest since October 1995 (+13 per cent).
However outlook for the next quarter is bleak, with 78 per cent of manufacturers foreseeing reduced demand due to the current economic slowdown as well as rising input costs, which have been experienced by a balance of +30 per cent of firms during the last quarter, with +29 per cent expecting them to continue their ascent throughout the next.
“Uncertainty about the future is growing across the sector,” said chairman of the CBI SME Council, Russel Griggs. “Firms, especially the smallest, are no longer able to absorb rising input costs and, even with fears of weakening demand, are now being forced to raise prices. This continued squeeze on profit margins means that product and process innovation is ever more important.”
He also added: “Significant concerns about the capital gains tax system over the last quarter of 2007 have not been allayed by the Government’s adjustments to the reform and with the economy is slowing across the UK and the wider world, confidence among SME manufacturers is low.”