SME manufacturers expect output and orders to decline over the next three months.
In addition, cost and price growth are expected to ease, albeit remain relatively strong.
Optimism fell again in the three months to July 2022, and investment intentions for the year ahead generally worsened.
The latest CBI SME Trends survey, based on the responses of 218 SME manufacturing firms, found:
- Output slowed to a near-halt in the three months to July (balance of +4% from +16% in three months to April) and is expected to fall slightly in the next three months (-6%).
- Total new orders stagnated in the three months to July (+2% from +22% in the three months to April). In the next three months, firms expect total new orders to decline (-18%).
- Business optimism fell again in the three months to July, though at a slower pace than the three months to April (-22% from -36%).
- Growth in average unit costs (+84% from +90%) and average domestic prices (+52% from +60%) eased slightly in the three months to July, but both remained strong. Growth in both costs and prices is expected to ease further in the three months ahead (+69% and +40% respectively).
- Numbers employed picked up at a similar rate as the three months to April (+19% from 21%), with SMEs expecting this growth to ease in the next three months (+5%).
- Investment intentions for the year ahead deteriorated compared to April for buildings (-25% from 0%), plant and machinery (-2% from +17%) and product & process innovation (+2% from +13%). Investment intentions for training and retraining remained around the long-run average (+13% from +15%).
Alpesh Paleja, CBI Lead Economist, said: “The sombre outlook for SME manufacturers continues to stifle optimism. Output and new orders are expected to decline over the next three months. Despite easing slightly, cost growth remains acute and investment appetite is petering out.
“To support SME manufacturers through this challenging period, the Government must continue to find ways to ensure that smaller businesses are not left behind. It is imperative that the Government takes bold action on business rates reform and incentivising investment to encourage economic growth.”
