Over the past quarter, the UK’s small and medium-sized manufacturers saw new orders grow at the fastest pace in two years, according to the latest SME Trends Survey produced by the CBI.
Based on responses from 422 manufacturers, the Survey reveals healthy growth in total new orders over the last quarter, underpinned by a strengthening in domestic demand.
Companies said they expect new orders to continue to grow solidly again over the next quarter, with the outlook for both domestic and export demand described by the employers’ group as “upbeat”.
CBI Principal Economist Alpesh Paleja said: “Activity among SME manufacturers is ticking along nicely, with new orders growth reaching a two-year high. The pick-up was largely shouldered by domestic demand with exports yet to see any material boost from the weakness in sterling.”
He went on to warn, however, that the lower pound is clearly stoking cost pressures, which in turn is pushing up factory gate prices and this is likely to mean that consumer prices will also rise.
The survey results show that output continued to grow modestly over the past quarter, but that firms anticipate an acceleration over the short-term.
More than a quarter (29%) of manufacturers surveyed said they were more optimistic, while 14% said they were less optimistic, giving a rounded balance of +16%.
Nearly a third (32%) of respondents reported that their domestic orders were up, while 20% said they were down, giving a balance of +12%. Almost a quarter (23%) said that export orders had risen over the past three months, with 19% saying they had fallen.
In terms of export prices, a balance of +44% anticipate them rising over the coming quarter – the highest level recorded since the survey started in October 1988.
