Smaller UK manufacturers get export orders boost

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The Independent Online

Britain's smaller manufacturers are finally catching up with the rest of the sector, according to a report today that shows export orders have risen for the first time in more than a decade.

Although the country's smaller producers have lagged their bigger counterparts, the Confederation of British Industry fuelled hopes of a broader recovery in its latest quarterly survey. Small- and medium-sized manufacturers are more optimistic about the coming months than at any time in more than two years, the CBI said.

The volume of total new orders, including those from domestic companies, soared at their strongest rate for nine years during the three months to the end of July. Medium-sized companies fared "particularly well" and expect "significant increases in orders over the next three months", the report added.

Steve Sharratt, chairman of the CBI's SME council, said: "These results are very encouraging and prove that the green shoots of recovery seen earlier in the year have continued to flourish."

The boost from export orders comes at a crucial time for the sector given that input costs are rising on the back of record oil and commodity prices. The smaller industry players have struggled amid a backdrop of 10 years of falling orders and lower output.

Nearly a quarter of companies said the volume of export orders had grown over the past three months, against 21 per cent who said it had fallen. In the past quarter, output has grown, albeit not by as much as companies had predicted. This built on the nascent recovery under way during February, March and April and companies questioned in July expressed hopes of higher growth in the quarter ahead.

Mr Sharratt said: "Healthy order volumes have helped lift optimism after years of tough conditions, but profit margins continue to remain tight and costs are still rising. Policymakers must nurture this sector to ensure continued growth."

The survey found that average unit costs have continued to rise sharply, although it expects the rate of growth to ease off over the coming months. Employment in small- and medium-sized companies was tipped to remain relatively stable over the coming quarter.

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