Manufacturing set to rise on domestic demand

(Bloomberg)

Smaller manufacturers are set to ramp production over the next three months as the recovery boosts domestic demand, the CBI will say today.

This comes as Deloitte said confidence had returned to the sector as administrations fell 43 per cent in the first nine months of the year

Yet smaller groups continue to struggle with securing financing, with 12 per cent citing external finance as likely to limit capital expenditure in the coming year. The CBI said many small manufacturers felt applications to banks for loans would be refused amid continuing controversy over the big four banks failing to "support recovery" by lending to business.

On production, the CBI will say that output growth softened slightly in the three months to October, as a temporary boost sparked by companies rebuilding stock they allowed to run down during the recession, came to an end.

But of the 382 respondents to the CBI's Small & Medium Sized Enterprise (SME) Trends Survey, 31 per cent said they expected their output to rise in the next quarter, while just 12 per cent predicted a fall. That gives a positive balance of 19 per cent, a sharp improvement on the balance of 9 per cent in the past three months.

The CBI will say that the rise in output is expected to be driven by improving demand from both the domestic and overseas markets.

There was also good news as accountancy group Deloitte said the manufacturing administrations this year has been "significantly lower" than in 2009. In the third quarter 66 firms failed, compared with 128 a year earlier.