Small manufacturing businesses predict upturn on rising demand

Small manufacturers expect to ramp up production during the closing months of the year on the back of rising demand, a new survey today suggests.

Nearly a third of small and medium-sized (SME) firms said they expected output to rise during the three months to the end of December, with only 12 per cent expecting a fall, the CBI's SME Trends Survey said.

The rise in production is expected to be driven by improving domestic and overseas demand, with a positive balance of 14 per cent of firms expecting total new orders to rise.

Firms' optimism comes despite the fact that output growth softened during the third quarter of the year as the temporary boost firms received from corporate restocking faded.

The survey noted that companies also hired more staff in the three months to October, with numbers in manufacturing rising at their fastest rate since April 2008.

Russel Griggs, chairman of the CBI's SME council, said: "Smaller manufacturers saw the pace of output growth slow slightly in the last three months after the fillip from stock rebuilding dwindled.

"But manufacturers expect a faster rise in production in the coming three months as demand at home strengthens.

"It is encouraging that firms have increased their headcount this quarter and are now planning to invest in plant and machinery, and innovation."

The survey was based on 382 respondents, which may have skewed the findings as similar industrial snapshots and official sector data tend to be based on much larger samples. A recent CBI Scotland industrial trends survey was based on 38 respondents, while the equivalent survey in the UK had 420 replies.