Small firms’ output hit by strong pound

OUTPUT among small and medium-sized manufacturers (SMEs) fell at the fastest pace since January 2013 in the three months to October, a survey out today reveals.

Rain Newton-Smith said demand had fallen

The CBI’s SME Trends Survey, covering 434 smaller UK businesses, said 23 per cent of Britain’s smaller manufactuers saw output lift and 31 per cent said it fell. This gave a negative balance of ‑8 per cent, although growth is expected to rebound in the next quarter, according to a balance of +7 per cent of firms.

Rain Newton-Smith, the CBI’s director of economics, commented: “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.”

Domestic order books fell for the first time in more than two years, and export orders dropped at their fastest pace since 2009.

The report says 26 per cent of SMEs canvassed reported an increase in new orders, and 38 per cent said they decreased. This gave a negative balance of ‑12 per cent.

It says 25 per cent of firms said domestic orders rose, with 36 per cent saying they fell,giving a negative balance of ‑11 per cent, the lowest since April 2013.

Export orders had a negative balance of ‑35 per cent, the lowest since April 2009. Small firms expect domestic orders to remain broadly flat over the next three months, + 3 per cent, and for export orders to fall at a markedly slower pace, ‑8 per cent.