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SMEs are reporting signs of recovery as orders for goods stopped falling last
quarter after more than a year of decline, a CBI survey shows.
They also expect the volume of orders over the next three months to grow at the
fastest rate for more than ten years and are the most optimistic about the
general business situation for two years.
These positive signs, however, must be tempered by the fact that high energy and
oil prices continue to drive up unit costs, especially for companies with fewer
than 200 employees. This will more than outweigh the slight rise in factory gate
prices and further squeeze profit margins.
Employment in the sector also continues to fall, particularly for small firms,
the SME Trends Survey of manufacturers reveals, and companies have reined back
their investment plans for buildings and plant & machinery.
Despite export orders continuing to fall, firms are marginally more optimistic
about export prospects than last quarter and medium-sized firms actually expect
orders to increase over the next three months.
Steve Sharratt, Chairman of the CBI's SME Council, stated: "After years of tough
conditions, smaller manufacturers are beginning to see some light at the end of
the tunnel.
"However, the next few months is make or break time if this is not to prove to
be yet another false dawn.
"It is therefore crucial that the Government pushes ahead with the deregulatory
agenda. Market conditions are tough enough without the Government adding to the
problems faced by UK businesses."
Source:
RedAlert
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