Business sentiment among the UK’s small and medium-sized (SME) manufacturers has been sombre for a third quarter running in the three months to January, according to CBI.
In a survey of 350 respondents of the CBI’s quarterly SME trends survey, 26 per cent said that output rose and 25 per cent said that the output fell.
The CBI sited concerns over political and economic conditions as a key factor why small businesses aren’t upbeat. Thirty-three per cent of firms believed that the current political scenario would limit export orders in the next three months, the highest proportion since October 2008 (33 per cent) and well above its long-run average (21 per cent).
The business group also reveals that business confidence in the SME sector has taken a beating because of the subdued conditions in the manufacturing sector.
Lucy Armstrong, chair of the CBI’s SME Council, said:
“Sentiment among small and medium-sized manufacturers fell sharply again in the past three months, brought down by rising concerns about the ongoing Eurozone crisis, which has led to falling orders and stagnant output.
“While figures for the next three months point to some stabilisation, the manufacturing sector is still facing significant headwinds, which can only add to existing uncertainty over demand and growth.”
Firms expect costs to rise at a slower pace again in the next three months (+13 per cent), while domestic and export price inflation are expected to pick up a little (+9 per cent and +8 per cent respectively), helping to alleviate some of the recent squeeze on profitability.