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News - 6 August 2013

Optimism rises among smaller manufacturers.

According to the CBI’s latest SME Trends Survey, optimism about the business situation rose among small and medium-sized manufacturers for the first time since April 2012, despite weak activity over the past quarter.

In the three months to July, total new orders continued to fall while domestic orders were static, and export orders fell for the fifth consecutive quarter.

Elsewhere, the pressure on margins eased somewhat as cost growth slowed, following a pick-up last quarter. However, it continues to run ahead of output price inflation.

Investment plans for the year ahead are broadly unchanged, although both internal and external finance constraints eased a little. Optimism around export prospects for the next twelve months rose more slowly than in the previous quarter, as manufacturers remained concerned about political and economic conditions abroad.

Despite all of this Anna Leach, CBI Head of Economic Analysis, said that optimism about the general business situation has risen for the first time since spring last year.

“Firms expect demand to improve both at home and abroad and production to stabilise over the next three months. But manufacturers remain concerned about the impact of political and economic conditions overseas on external demand, reflecting on-going uncertainty about the global economic outlook.”

Key findings – three months to July: 5 August 2013

  • 30% of firms reported an increase in total orders and 37% said they decreased, giving a balance of -7%, disappointing expectations of growth (+11%) in the previous survey.
  • 27% of firms reported an increase in domestic orders and 30 % said they decreased, giving a balance of -2%
  • 22% of firms reported an increase in export orders and 26% said they decreased, giving a balance of -4%
  • Output fell for the fifth consecutive quarter (-6%)
  • But manufacturers expect growth in total new orders (+9%), domestic orders (+5%) and export orders (+5%) in the next three months, while a stabilisation in output is predicted (+1%)
  • Sentiment about the general business situation (+9%) rose for the first time since April 2012, while optimism about export prospects rose for the second consecutive quarter (+4%)
  • Numbers employed grew slightly (+5%) but headcount is expected to decline slightly in the coming quarter (-4%)
  •  Average domestic and export prices were flat (+1% and +2% respectively). Average unit costs for manufacturers came down (+10%) following a spike in the previous quarter

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“The July 2013 CBI Industrial Trends Survey was conducted between 20th June and 10th July with a total of  390 manufacturing firms replying to the survey. During the survey period the pound averaged €1.18 and $1.52, while Brent Crude averaged $104.09 per barrel, compared with €1.17 and $1.53, and $106 per barrel in the April survey period.”

For business advice and a more personal approach, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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