UK SMEs to Increase Production Due to Boost in Demand

According to CBI Trends Survey, conducted on 382 companies, the domestic demand is supposed to be increased in next three months, indicating the SME owners to speed up their production processes. The temporary boost in demand due to stock rebuilding also faded which led to slight decrease in output growth in last three months till October.

Due to the increase in demand domestically and overseas, the output is expected to be increased. With a balance of +19% (the balance is +9% in last three months), 31% of the respondents expect output to rise in the next quarter, while 12% expect a fall. On being asked about the volumes of total orders for the next three months, 31% of SMEs expect it to rise, while 18% expect them to fall, creating a balance of +14% (up by +9% in the past quarter)
For the next three months, there is found a rise in domestic orders(a balance of +10%), it remain stabilized during the three months till October (+2%). coming quarter is expected to see a solid growth with balance of 13% (11% last quarter).

The statistics in regard with head count, showed an increase. Creating a balance of +7%, the number of employed persons increased at a much faster rate all across the sector. It was +7% in April 2008 while it is expected to be -3% in next three months.

The reports showed that firms are planning to increase their investment in plant and machinery, with a balance of +6%, in products and process innovation (+10%) and willing to decrease in buildings with a balance of -15%.

Stability was seen in the work in progress inventories ( a balance of 0%) and inventories of finished goods(-1%), with a slower increase in stocks of raw materials (+6%), after rebuilding of stocks in the past quarter.

As the cost of average units increased rapidly, there was decrease in profits. This quarter the rise was with a balance of +31% and it was at the fastest rate since 2008 October (53%). but it was also found that few firms were passing these on to the customers, as the average domestic prices were found to be flat at -1% balance for the third quarter consecutively.

12% (slightly raised from previous quarter) external finance was cited as a limiting factor to capital expenditure in the coming year. 7% of firms find the finance will limit output.

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