Production accelerates for UK’s smaller manufacturers
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Stronger demand and companies rebuilding stocks of goods helped boost production among the UK's smaller manufacturers, according to the CBI's latest quarterly SME Trends Survey. But the business group said that growth is likely to stall in the next three months in the face of weaker demand.
Of the 403 small and medium-sized manufacturers that responded to the survey, 41 per cent said output rose in the three months to July, while 20 per cent said it fell. The resulting balance of +21 per cent is the fastest growth since April 1995 (+25 per cent), and an improvement on the previous quarter (+3 per cent).
The rise in output was driven by strengthening demand at home and abroad. 37 per cent of firms saw the volume of total new orders increase during the quarter, while 24 per cent saw a decline, giving a balance of +13 per cent. That is the fastest growth since July 1995 (+17 per cent).
Exports were particularly strong, with a balance of +22 per cent of firms reporting a rise in the volume of overseas orders, the fastest growth since April 1995 (+35 per cent). Meanwhile, domestic orders saw more modest growth (+6 per cent).
With demand improving, firms also started re-building stocks, which also contributed to the strong rise in production. Stocks of raw materials (+16 per cent), work in progress (+8 per cent) and finished goods (+9 per cent) all increased during the quarter.
Looking ahead to the next three months, firms anticipate a slight fall in output (-5 per cent), as the trends in domestic and export orders are expected to weaken, by a balance of -5 per cent and -3 per cent respectively. As a result, total orders are also expected to fall (-4 per cent).
