Britain's small-scale manufacturers face a prolonged period of constrained demand thanks to limited domestic orders, a survey of small and medium enterprises (SMEs) has shown.
The Confederation of British Industry's (CBI) latest survey of SMEs finds that poor domestic demand, combined with continuing pressure on costs, is maintaining difficult trading conditions in the sector.
A balance of minus 11 per cent was achieved in the last quarter, with 19 per cent saying order volumes were up and 30 per cent saying they had fallen, despite the predicted positive balance of six per cent.
It had been hoped that supply and demand pressures would ease following an apparent recovery in the summer, but these were dashed last month as a dampening of demand caused yet another setback for the struggling sector, as Steve Sharratt, chairman of the SME Council at the CBI, explained.
"Optimism in the first half of the year saw firms hoping for growth in orders, but the sector has faced some tougher times, and things have turned out differently," Mr Sharratt said.
"A fall in demand and optimism coupled with further cost rises all place a question mark over the green shoots of recovery that we saw earlier this year."
Despite the pessimism the number of export orders was expected to grow in the next quarter, the CBI survey showed, providing a positive note for manufacturers' future prospects.