Smaller businesses are enjoying an export-led boost, new figures have indicated.
According to the CBI’s latest quarterly SME trends survey, of the 402 manufacturing firms polled, over a third (36 per cent) reported a rise in the volume of total orders in the three months to April, while a quarter (26 per cent) registered a fall.
The resulting balance of +10 per cent is the first significant growth since January 2008.
A third of firms said that export order volumes increased, with 15 per cent noting a decline. The overall balance of +18 pr cent is the strongest since July 1995, the CBI announced.
The volume of domestic orders also showed signs of stabilising, with 31 per cent reporting a rise and 28 per cent a drop, giving a balance of +2 per cent.
It wasn’t all good news, though.
Hikes in commodity and raw material prices have squeezed profit margins. The balance of +21 per cent of firms that experienced an increase in unit costs represented the fastest growth in costs since January 2009.
Getting hold of credit remains a persistent problem for many smaller firms too. One in ten (12 per cent) cited credit or finance constraints as likely to limit export orders, while 7 per cent said that limited credit will put a brake on output.
Russel Griggs, chairman of the CBI’s SME council, said: “The UK’s smaller manufacturers are finally reaping the benefits of all their hard work as well as a relatively weak currency. Exports are growing steadily, domestic demand and production are stabilising, and firms are feeling more upbeat about prospects.
“With demand expected to grow in the coming months, manufacturers are thinking about taking on extra staff over the next three months.
“However, firms are experiencing a sharp rise in raw material costs which is squeezing profit margins. But they do expect to recoup some of this by raising prices over the next quarter. It is also still a concern that access to credit remains a headache for some firms.”
