SME export orders ‘racing ahead’ says CBI report

SME export orders showed strong growth last quarter, according to a survey of small and medium manufacturers in the United Kingdom.

This is in contrast to growth in domestic orders placed on U.K. SMEs – which appears to have “stalled,” say the Confederation of British Industry (CBI).

SME export orders - cardboard boxes - pixabay-1164196Export orders continue to rise for small and medium manufacturers in the U.K. Image: pixabay-1164196

Every 3 months, the CBI carry out a survey of small and medium-sized enterprises (SMEs) in the U.K. manufacturing sector.

The latest SME Trends Survey of 328 firms reveals that growth in SME export orders in the 3 months to May is the highest for nearly 30 years.

Orders expected to flatten

Of the respondents surveyed, 34 percent said that their total orders had increased in the last quarter, compared with 20 percent who said that they had reduced.

However, this robust positive balance of +14 percent overall growth in SME orders is expected to flatten to zero next quarter, report the CBI.

Also, while the difference between those who said export orders had grown and those who said they had shrunk was, at +37 percent, the highest seen since October 1988, for domestic orders the difference was a -1 percent.

‘Solid growth’ in output and jobs

There was also a positive balance (+17 percent) in SMEs that reported a continued growth in output, although the pace is slightly lower than in the previous 3 months.

This growth is likely to be maintained in the next quarter, keeping to a balance of +17 percent.

Employment also appears to be following a similar pattern with 36 percent of SME manufacturing firms saying they had increased their number of employees compared with 10 percent who said they had reduced it.

This balance of +26 percent “represents solid growth,” that is expected to continue, say the CBI.

The survey found a balance of +17 percent between those manufacturing SMEs who said they would increase employee numbers and those who said they would decrease them in the next quarter.

No decrease in pressure on costs

In the meantime, the pressure on costs continues at a pace: 43 percent of SME firms said that their average unit costs went up, compared with only 5 percent who said that they went down, giving a huge difference of +38 percent.

The survey also found that SMEs appear to be taking a much dimmer view of the future compared to the previous quarter, when there was a surge in optimism.

Only 21 percent of SMEs surveyed felt more optimistic about the “general business situation” than last quarter compared with 24 percent who said they felt less optimistic. This gives a balance of -3 percent, in stark contrast to the previous quarter’s +22 percent.

“With challenges ahead both at home and abroad,” says Alpesh Paleja, CBI principal economist, “it’s important that businesses have the certainty that they need to invest and grow.”

“As a result,” he continues, “building on recent progress in agreeing a transition period, other hurdles on the Brexit path need to be cleared swiftly and in the same spirit of compromise.”

According to government statistics, around 10 percent of UK SMEs export directly, while another 17 percent SME sell their output to other UK-based firms that export their goods.

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