SME output in the UK still unstable

In a recent UK survey by the CBI (Confederation of British Industry) 359 SME (small and medium-sized enterprises) were asked about their output volumes. While 23% said that output volumes had risen, 28% said that they had fallen during the last quarter. This means that the 5% overall fall is the first since October 2009, when the fall was 14%. Firms remain positive that in the coming quarter the output will be 2% up.

It was discovered through the research between 25 June and 11 July that during the last quarter export orders fell by 4% however domestic orders remained the same at 2%. The CBI is expecting the output prices and orders to fall over the next quarter, however costs should remain flat.

SMEs, in line with expectations, increased headcount 11% during the quarter, but are not expected to hire in the next quarter. Optimism about the situation of business fell 13% in the quarter, which followed a previous improvement.

It was also found in the survey that SMEs had reduced by 4% domestic output prices, with export prices remaining the same for the third quarter running. The average unit cost inflation, at +8%, is now the lowest it has been since October 2009, when it was +3%.

Chair of SME council at the CBI, Lucy Armstrong, has blamed uncertainty over the Eurozone and challenging domestic conditions for damaging the UK’s smaller manufacturers. She goes on to say that over the last three months production has fallen and sentiment has deteriorated. The demand for goods has stalled and is not expected to improve over the next quarter.