SME exports hit decade high

17-08-2006

Small and medium-sized manufacturers (SMEs) have reported a growth in export orders for the first time in over a decade, according to new research.

The latest SME trends survey completed by the Confederation of British Industry (CBI) also found that the overall level of new orders, including domestic orders, was at its strongest in nine years.

Of those manufacturers who replied to the CBI's survey, conducted between March 22nd and April 11th, 24 per cent said the volume of export orders had grown over the last three months, compared to 21 per cent who said it had fallen.

Asked about the volume of total new orders, a balance of six per cent of firms reported a rise over the quarter, while a balance of nine per cent said they expected a further rise over the coming three months.

Optimism among manufacturers also improved for the first time in two years, the CBI said, "reflecting a feeling of continued recovery after a long period of declining orders."

But while a balance of four per cent of firms expected the outlook to improve over the coming quarter, confidence was far greater among medium-sized businesses compared to their smaller counterparts. The balance of small manufacturing firms expecting the business outlook to improve was minus one per cent while 18 per cent more medium-sized companies expected the situation to improve, than to deteriorate.

The CBI said that while growing order volumes had helped raise levels of optimism, rising costs were continuing to squeeze profit margins across the manufacturing sector.

A balance of 32 per cent of SMEs said costs had risen by more than expected over the last three months, while a balance of 18 per cent predicted further rises over the coming quarter.

Chairman of the CBI's SME council, Steve Sharratt, said that the results were "very encouraging" but warned that policy makers would need to act to ensure further growth across Britain's manufacturing sector.

"These results are very encouraging and prove that the green shoots of recovery seen earlier in the year have continued to flourish," said Mr Sharratt.

"Healthy order volumes have helped lift optimism after years of tough conditions, but profit margins continue to remain tight and costs are still rising," he warned.

"While things are clearly moving in the right direction there is no guarantee that this momentum will be maintained. Policy makers must nurture this sector to ensure continued growth."


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