Page 6 - Industrial Technology February 2020

INDUSTRY NEWS

SME optimism up,

but activity subdued

OPTIMISM IS UP AMONG UK MANUFACTURERS, BUT SCRATCH BELOW
THE SURFACE OF THE DATA AND BUSINESSES ARE STILL STRUGGLING

CBI survey of 279 SME manufacturers has more optimistic regarding their business situation, while
reported that optimism about the business 14% said they were less optimistic, giving a rounded.
situation rose at the strongest pace since April Some 22% of firms said output increased and 29% said it
A2014 in the quarter to January. The upward decreased, giving a rounded balance of -7%. Growth is
swing in growth from the previous quarter was the largest expected to rally next quarter (+18%). 30% of firms
improvement in optimism in a single quarter in the survey’s reported an increase in total new orders, and 38% said
history (since October 1988). Optimism about export they decreased, giving a rounded balance of -7%. New
prospects also rose for the first time since July 2018. orders are expected to rise (+18%) over the coming
However, output volumes and domestic orders fell in quarter.
the three months to January, while export orders were flat. Looking at the domestic picture, 28% of firms said
But output and domestic orders are expected to grow in the orders increased and 35% said they decreased, giving a
quarter ahead. Chiming with the weak activity this quarter, balance of -7% (from -12% in October 2019). Domestic
numbers employed fell (at a similar pace to the previous orders are expected to grow (+14%) over the next three
three months) and are expected to remain flat in the next months. 23% of firms reported an increase in export orders
quarter. and 23% said they fell, giving a rounded balance of -1%.
Investment intentions for the year ahead improved Firms anticipate export orders will remain broadly flat
across the board. Spending plans for buildings, plant and (+1%) next quarter.
machinery, and product and process innovation all rose Numbers employed continued to fall, with 13% of firms
above their long-run averages, though point to only flat or saying they had seen growth in headcount and 20% saying
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downshift. slightly higher capital spending in the next twelve months. they had seen a reduction, giving a rounded balance of -8%
Furthermore, SME manufacturers still expect to cut back on (from -5% in the three months to October). SME
faulhaber.com/GPT/en investment in training and retraining, where investment manufacturers’ investment plans for buildings (-3%), plant
plans remain below historic norms. Labour shortages rose and machinery (+1%) and product and process innovation
further as a cited constraint on capital spending, reaching (+6%) all rose above their long-run averages (-17%, -7%
another survey high. and +8% respectively).
NEW Alpesh Paleja, CBI lead economist, said: “It’s brilliant Average domestic prices were flat (+1%) and export
NEW
the UK’s small and medium-sized manufacturers are prices fell (-11%), but both are expected to rise in the next
feeling markedly more optimistic about the business quarter (+11% and +18% respectively).
outlook, with the outlook for activity and investment Tom Crotty, group director at INEOS and chair of the
looking more hopeful too. But scratch the surface, and it CBI Manufacturing Council, said: “The boost to optimism
seems that SME manufacturers are still struggling. This in the manufacturing sector is very encouraging given the
NEU continues the theme seen across the recent swathe of difficult environment that firms have faced in recent
NEU
months. However, it is clear that the sector is not yet out of
economic data: sentiment and expectations clearly
improving, but little sign of it feeding through to activity. the woods in terms of performance, which means that this
“Furthermore, businesses are still grappling with longer- optimism could prove to be short-lived unless the
term uncertainty around the end state of Brexit. It’s the government use their newfound strength to help address
vital the Government works quickly to secure a good trade underlying issues holding back manufacturers.
deal with the European Union: one that shores up British “Manufacturers are ready to work with the government
manufacturers, protects jobs and allows industry to grow.” to make real progress on key domestic challenges such as
Looking at the key findings in details, 45% of small and increasing productivity, addressing skills shortages,
medium enterprise (SME) manufacturers said they were improving sustainability and tackling climate change.”

WE CREATE MOTION INDUSTRIAL TECHNOLOGY • February 2020