According to the latest SME Trends Survey by the Confederation of British Industry (CBI), small and medium-sized manufacturers saw output fall in the three months to October, as both domestic and export orders dropped.
The survey of 434 smaller firms reported that output growth fell at the fastest pace since January 2013, with export orders doing even worse, having declined at their fastest pace since 2009.
CBI Director of Economics Rain Newton-Smith said: “As demand has fallen, especially in the face of a strengthening Pound, our smaller manufacturers have had a tough quarter, with orders and output volumes dropping. Manufacturers expect conditions to stabilise somewhat over the quarter ahead, but remain concerned about the outlook for demand.”
Business optimism fell for the first time since January 2013, as did optimism over export prospects in the year ahead.
Only 10% of firms reported an increase in export orders while 46% said they fell, giving a rounded balance of -35%. However, firms said that they anticipated that export orders would fall at a significantly slower pace (-8%) in the next quarter.
Calling on the Government to use the Comprehensive Spending Review to prioritise spending that supports skills and innovation, thus spurring a revival in productivity growth in the UK, Ms Newton-Smith said that innovation and technology are crucial to driving productivity.
