SME exports hits recession levels as business optimism falls » SMEInsider

SME exports hits recession levels as business optimism falls

Output growth for British exports fell at the fastest pace since January 2013, while export orders are at their lowest levels since the recession, the Confederation for British Industry (CBI) has found.


Drop in numbers

According to the lobbying organisation’s latest SME Trends Survey, the exporting market has taken a hit over the last three months to October.

Just 26 per cent of SME manufacturers reported an increase in new orders, while 38 per cent said they decreased, resulting in a rounded balance of -11 per cent.

The data was found by interviewing 434 British firms, with the CBI finding that export orders have declined to a pace reminiscent of the 2008 recession.

Around ten per cent of small business owners said that export orders had increased, with 46 per cent reporting a drop in exports, resulting in a rounded balance of -35 per cent, the lowest since April 2009 (-39 per cent).

Although export orders are expected to further decline as we enter the New Year, domestic orders and output are expected to steady in the coming quarter, at a rate of +3 per cent. Over the past three months, 25 per cent of SMEs reported an increase in UK orders, while 36 per cent reported a decrease.


Looking ahead

Moving into 2016, small business manufacturers expect export orders to remain fairly stable, with firms anticipating orders to fall at just -8 per cent in the next quarter.

Optimism for the year ahead is low, with just 22 per cent of SME owners optimistic regarding their business situation, with 29 per cent showing low signs of positivity.

Employment figures are likely to remain high, with 23 per cent of firms reporting a growth in headcount, with just 15 per cent reporting a reduction.

Manufacturers are expected to invest less in machinery over the next 12 months, with a six per cent cut in plant and machinery spending and a 13 per cent cut in building investments.

This will have an effect on export levels, with SME owners expecting an eight per cent drop in the next quarter.

Rain Newton-Smith, CBI director of economics, has called on the government to use the Comprehensive Spending Review to prioritise spending to support skills and innovation.

‘‘As demand has fallen, especially in the face of a strengthening Pound, our smaller manufacturers have had a tough quarter, with orders and output volumes dropping,’’ explained Newton-Smith.

The government is investigating its UK Trade and Investment department as it failing to hit it’s target of £1 trillion worth of exports by 2020, a target which was set by chancellor George Osborne.

‘‘Manufacturers expect conditions to stabilise somewhat over the quarter ahead, but remain concerned about the outlook for demand.’’

The survey has arrived just before the EEF’s innovation report. The manufacturing industry support group will demand that the government do more to support innovation in the UK, with 60 per cent of companies surveyed under the impression that the Conservative Party ‘‘could do better’’ when supporting business innovation.

If you’re looking to know more about small business that export, check out our interview with UKTI ambassador Gabriele Albarosa, who explains why trading abroad can be beneficial for all UK SMEs.