–SME Orders, Output Highest Since 1995
–CBI: SMEs See Demand Likely Falling In Next Three Months

LONDON (MNI) – Orders and output among the UK’s small- and
medium-sized manufacturers grew at their fastest rate in 15 years in the
past 3 months, according to the Confederation of British Industry’s
latest quarterly SME Trends Survey.

But the CBI found that medium-sized companies are predicting a
drop in demand and output in the next quarter.

Of the 403 small and medium sized firms surveyed, 41% saw output
rise in the three months to July, while 20% reported a fall. The
resulting balance of +21% is an improvement on the previous quarter’s
balance of +3%, and the fastest growth since April 1995.

The volume of total new orders also grew strongly, with 37% of
firms saying it rose, and 24% saying it dropped, giving a balance of
+13%, up from the +10% reported last quarter and the highest since July
1995.

Looking ahead to the next three months, firms anticipate a slight
fall in output (-5%) as the trends in domestic and export orders are
expected to weaken by a balance of -5% and -3% respectively. As a
result, total orders are expected to fall (-4%).

The CBI said 79% of firms believe a drop in demand will limit
output, up from 76% last quarter.

Concerns over access to credit eased during the last quarter with
4% of firms citing credit or finance constraints as likely to limit
export orders, compared with 12% in the previous quarter. This is now in
line with the long-run average, the CBI said.

Optimism about the business situation among small- and medium-sized
manufacturers dropped to a balance of +3%, compared with a balance of
+14% in the previous quarter.

Russel Griggs, Chairman of the CBI’s SME Council, said: “Smaller
manufacturers enjoyed a bumper quarter with production ramped up to meet
growing demand and to rebuild stocks.”

“Exports are leading the charge, reflecting the pick-up in global
trade and the relative weakness of sterling, but firms are still seeing
their profit margins squeezed because of rising costs,” he said.

The July 2010 CBI SME Trends Survey was conducted between June 22
and July 7. The total response was 403 manufacturing firms with fewer
than 500 employees, of which 342 employed under 200 staff.

–Email: ukeditorial@marketnews.com; tel: +442078627485

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