Smaller manufacturers report business difficulties

It appears that the tough trading conditions of late are having a negative impact on smaller manufacturers as research suggests that sentiment is deteriorating.

The latest quarterly SME Trends Survey from the CBI received 359 responses, with 28 per cent of manufacturers reporting that output volumes fell in the three months to July, while just 23 per cent reported that they had risen. This marks the first fall in the balance since October 2009.

Export orders also fell slightly on the quarter to July and domestic orders remained almost flat. The deteriorating business conditions coincided with a drop in optimism about the general situation, as investment intentions softened and companies reported plans to lower their capital expenditure over the coming year.

Lucy Armstrong, chair of CBI’s SME Council, commented: “Challenging domestic conditions, continuing uncertainty over the Eurozone, and a broader loss of momentum in global growth, are clearly taking their toll on the UK's smaller manufacturers.

"Production has fallen over the last three months and sentiment has deteriorated, while growth in demand has stalled, with little improvement expected in the coming quarter.”

However, she did note that smaller manufacturers are still starting to take on some new staff, suggesting that there may be some light ahead.