CBI survey shows strong growth for SME manufacturers

The latest SME Trends Survey from the CBI has been released, showing strong growth for SME manufacturers.

Output and new orders has risen considerably over the last quarter to July, with respondents reporting new orders rose at their fastest pace since 1995. Both domestic and export orders surpassed expectation with strong growth.

Although output also rose strongly over the past three months, respondents expect to see this pace slow down significantly, for both production and orders over the next quarter. While domestic orders are expected to flatten out. Optimism about export prospects in the year ahead also rose at a much slower pace.

Companies report strong intentions to invest inwardly over the coming year, with plant and machinery renewed. Investment plans are actually at their strongest in the survey’s history.

However, investment in product & process innovation and training and retraining, is expected to fall at a pace unseen since the financial crisis.

Employment records showed strong growth, although concerns are being aired over skills shortage, with the highest number of firms reporting skilled labour as a factor likely to limit output since 1988.

Respondents also report intense pricing pressures.

Alpesh Paleja, CBI Principal Economist, said: “SME manufacturers will be feeling buoyant after a period of strong growth in orders and production. But cost pressures remain stubbornly high, and the clouds of uncertainty are still looming large, as seen in the deterioration in firms’ plans for investment in “intangible” areas.

“The retrenchment of training budgets is worrying at a time when skills and labour shortages are really biting hard, and highlights the need for urgent reform of the Apprenticeship Levy, so that it truly delivers for people and businesses.”

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