Smaller manufacturers see decline in output, says CBI

The steady decline in orders and output for small and medium-sized manufacturers continued over the last four months, with expectations of a turnaround failing to materialise, a CBI survey has found.

The fall in output reported by small and medium-sized enterprises (SMEs) reflects the general pattern for all UK manufacturers, while SME orders fell more sharply than those of larger manufacturers.

22% of SMEs said total new orders were up over the last four months, 38% said they were down. The balance of minus 16% compares with minus 11% reported in April and contrasts sharply with the predicted figure of plus 14%.

23% of firms recorded an increase in output, 34% recorded a fall. The balance of minus 11% compares with minus 14% in April and falls well short of the expected figure of plus 13%. The total volumes of orders and output of small firms are again more negative than medium-sized ones.

Failure to realise the predicted change of fortunes has damaged SME confidence, causing firms to significantly revise predictions for the next four months. SMEs expect orders and output to stabilise, whereas larger manufacturers anticipate a small pick up. Medium-sized firms are more positive than small ones.

The volume of export orders continues to be weak. The rate of decline is the same as April. Export optimism has fallen slightly, but firms do expect orders to stabilise over the next four months.

Simon Bartley, chair of the CBI&#39s SME Council, says: “Smaller manufacturers are disappointed. The recession maintains a tight grip despite the confident expectations of last quarter. Orders and output have been declining for eighteen months, but firms do expect business to stabilise. Smaller manufacturers now anticipate a more gradual and protracted recovery than they had hoped for earlier this year. All UK manufacturers, regardless of size, will be hoping for a sorely needed pick-up in global demand.”