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Orders and output plunge for smaller UK firms

Orders for goods and output fell at the fastest rate for 20 years at small and medium-size enterprise (SME) according to the Confederation of British Industry (CBI) in their latest quarterly SME Trends survey published this morning.


The CBI surveyed 484 firms, of which 64% saw the volume of total new orders fall in the three months to April, while 13% reported an increase. When these are offset against each other there was a balance of -51%, which is the lowest figure since the survey began in 1988. As could be expected, the fall in orders had a knock-on effect on output, with 57% of firms reporting a decline and only 9% claiming a rise. This gives a balance of -48% which was another all-time low.


According to Russel Griggs, Chairman of the CBI’s SME council: “It has been a torrid few months for smaller manufacturers. With orders and output falling at the fastest rate since this survey began, many firms have had no option but to let staff go.”


Small companies see output and sales fall at fastest rate for 20 years

Small companies see output and sales fall at fastest rate for 20 years

In fact, 50% of companies in the survey had cut employment in the quarter, with only 6% taking on new staff. The balance of -44% was another survey low.


Russel Griggs went on to say: “Although companies seem hopeful that the pace of decline in manufacturing activity may be moderating slightly, the next three months are still going to be very tough for many firms. This survey shows worries about credit and finance are continuing to constrain some firms’ plans, but we are hopeful that recent government and monetary measures should see access to credit getting easier in the coming months.”


However, even given the weakness of sterling, export orders fell at a faster rate than firms had been anticipating. On the other side of the coin, average unit costs rose at a faster rate than was expected in January, as the fall in sterling made imports more expensive.


On balance, SME’s are expecting the decline in orders, output and employment to improve in the next quarter.

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Posted in Manufacturing, recession, UK industry, unemployment

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