SME manufacturers see exports fall but confidence remains high

Small and medium-sized manufacturers have seen an overall fall in export orders over the past three months, a new survey has revealed.

According to the latest Quarterly SME Trends report from the Confederation of British Industry (CBI), almost a quarter (24%) of SME manufacturers reported a fall in export orders over the first quarter of 2016. Less than a fifth (17%) reported an increase in orders.

The rounded balance indicated an overall drop in export orders of around 8%. This is a faster rate of decline than in the last quarter of 2015, when a net 4% reported fall in export orders was noted. Export prices also continued to fall, with a net 11% of SME manufacturers reporting a drop in prices.

Almost a third (32%) of SME manufacturers cited political and economic conditions abroad as potential factors that could have a negative impact on export orders.

For SMEs relying wholly or primarily on export this could represent a serious problem and could even leave some facing insolvency. Those serving domestic or mixed markets faced better news however, with a positive balance of 5% of SME manufacturers reporting an increase in domestic orders. Total orders also rose slightly.

Overall output remained relatively flat, with a rise in output volume of just 1%. According to the CBI, this flat production performance by SME manufacturers was in line with the manufacturing sector as a whole.

Confidence remained high, especially when it came to exports. Despite the reported decline in orders over the past two quarters, 23% of businesses surveyed said they expect export orders to rise over the coming three months.

Reported employment was also up amongst smaller businesses. A net 15% of SME manufacturers said their employee numbers had grown. Spending on training and retraining grew by 26%, although the report warned that this was not always a good sign.

According to the CBI, a larger than usual increase in training expenditure could be a sign that skills shortages are starting to affect businesses again.

By Phil Smith

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