Business confidence among SME manufacturers stabilised in the quarter to April, according to the CBI’s latest SME Trends survey, ending a run of five consecutive quarters of declining sentiment.
The survey paints a picture of tepid demand during the quarter to April, with output contracting for the third consecutive quarter and new orders broadly unchanged through the quarter. However, SME manufacturers expect both output and new orders to pick up in the three months to July.
There were signs that some of the challenges that faced the UK’s SME manufacturing sector in 2022 continued to ease. The share of firms reporting that shortages of skilled labour and shortages of materials or components could constrain output over the next three months fell back further from last year’s highs (while remaining above average). The share citing concerns over orders or sales rose to its highest level since July 2021 (but remained below average).
The survey suggests that both cost and price growth eased over the quarter, slowing from 2022’s record rates, though remaining historically strong. SMEs expect growth in average unit costs to slow further in the next three months, but to continue to outpace growth in domestic selling prices, which are expected to increase at a similar rate to last quarter.
Investment intentions were mixed, with SME manufacturers expecting to reduce spending in buildings in the year ahead and to keep spending on plant and machinery flat. Spending on innovation, and on training and retraining is expected to rise.
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