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CBI shows strength in manufacturing sector

14 Aug 2017

The latest CBI survey for Q3 has revealed a strong output growth in the SME manufacturing sector, keeping Brexit and inflation fears at bay. However, it remains to be seen how future concerns over the labour market and exchange rates will impact future confidence in the sector.

 

Key findings from the survey included:

  • 36% of firms said the volume of output over the past three months was up and 15% said it was down, giving a balance of +21%, the joint-highest since April 1995 (+25%)
  • 19% of firms said they were more optimistic about the general business situation than three months ago and 17% were less optimistic, giving a balance of +2%.  Optimism about export prospects for the year ahead rose at a robust pace (+22%).
  • 38% of businesses reported an increase in total new orders, and 22% a decrease, giving a balance of +16%.
  • 28% of manufacturers said employee numbers were up, and 11% said they were down, giving a balance of +17%.

 

The survey, which had 364 respondents, revealed that new orders continued to rise at a strong pace. In fact, export order growth is predicted to be at its highest level since April 2011 and there are no signs of slowing growth in employment either, which is also seemingly remaining solid.

 

Whilst that is likely to put any fears surrounding Brexit to rest, there were some concerns regarding the potential skilled labour shortage which may limit output after Britain exits the EU. Cost pressures also remained high which not only has a potential impact for future employment levels, but the price of goods in the UK market are expected to rise, which has left some concerns among SMEs in the sector.

 

It is very good to see that optimism remains high for SME manufacturers as they take advantage of low exchange rates. However, this won’t last forever and it will be interesting to see how tariffs and exports will change as UK prepares to leave the EU. Access to labour and competitive costing will be key concerns – particularly for SMEs in the manufacturing sector. No doubt, there will be an increasing need to continue to access foreign labour whilst pursuing and nurturing home-grown skills.

 

If your business is facing any challenges as a result of the current trends, or you would like any further advice relating to anything mentioned in this article, please contact Rob to see how we can help.

 

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