Optimism has risen at the fastest pace since records began among small and medium-sized manufacturers on the back of improving demand and output, according to the CBI’s latest SME Trends Survey.
Total new orders increased in the three months to October for the first time since July 2012, driven by domestic orders which rose at their fastest rate since January 1995. Export orders rose at their fastest rate since April 2011, while optimism around export prospects for the next twelve months increased strongly. Alongside the improvement in demand, output rose modestly and is expected to pick up at a faster pace over the next three months, accompanied by a further improvement in orders.
Greater optimism and activity among SMEs has also led to a step change in investment plans for the year ahead, with forecasts for spending on buildings, plant and machinery, product innovation and training all in positive territory.
Stephen Gifford, CBI director of economics, said: “This has been a positive quarter for small and medium-sized manufacturers, with new orders and output both on the rise, and further improvements expected next quarter.
“Optimism about the general business situation has improved and is now at a record high, and there is evidence of a general thaw in investment intentions for the year ahead.”
The survey also found that 42% of firms reported an increase in total new orders and 25% said they decreased, giving a balance of +17%, ahead of expectations of modest growth (+9%) in the previous survey.
Manufacturers also expect demand to strengthen again in the next three months, with robust growth in total new orders and domestic orders.
Investment intentions are up on the previous quarter, with plans to spend more on buildings (+5%), plant and machinery (+11%), product and process innovation (+21%) and training (+21%) relative to the past twelve months.