The latest SME Trends Survey by the CBI has revealed strong growth in output and new orders amongst the nation’s small and medium-sized (SME) – driven in part by overseas interest in the UK.
The survey of UK small manufacturers and businesses revealed that new orders rose at their fastest pace since 1995, off the back of strong growth in both domestic and export orders.
Over the last three months output also increased significantly ahead of an expected slower period of growth in production and orders over the next quarter.
This decline is thought to be the result of domestic orders falling. Optimism about export prospects in the year ahead also rose at a much slower pace than in previous quarters, but remained buoyant.
As a result of the survey’s findings, firms expect to increase spending on plant and machinery in the year ahead, with investment plans at their highest levels since October 1988. But investment in product and process innovation and training is expected to fall significantly.
Alpesh Paleja, CBI Principal Economist, said: “SME manufacturers will be feeling buoyant after a period of strong growth in orders and production. But cost pressures remain stubbornly high, and the clouds of uncertainty are still looming large, as seen in the deterioration in firms’ plans for investment in “intangible” areas.
“The retrenchment of training budgets is worrying at a time when skills and labour shortages are really biting hard, and highlights the need for urgent reform of the Apprenticeship Levy so that it truly delivers for people and businesses.”
Alongside concerns about skills, the survey showed pricing pressures also remained intense, with average unit costs remaining elevated.
The study said: “In the face of continuing cost pressures, firms have been stockpiling, with growth in stocks of both raw materials and work in progress the fastest on record.”