Are UK SMEs holding things together?
Britain’s manufacturing industry grew at a particularly disappointing rate in December, but there was some good news despite the below-forecast expansion. With the country’s smaller businesses reporting an increase in orders, could SMEs represent a glimmer of hope for UK industry going into 2016?
The good news
Last month, the Markit/CIPS UK manufacturing Purchasing Managers’ Index (PMI) slumped to 51.9. While anything above 50 represents growth, analysts had predicted a figure of 52.7. Furthermore, December’s total was lower than November’s 52.5 and October’s 55.5.
SMEs, however, reported greater numbers of new orders – particularly from overseas – compared to larger manufacturers, and sentiment among smaller outfits was generally more positive too. Moreover, smaller firms were able to take on new employees over the month of December.
The bad news
It’s not all roses for UK SMEs, however. According to another survey, Lloyds Bank’s ‘Business in Britain’ confidence index, smaller firms aren’t so positive about the future as PMI’s statistics might suggest. The index revealed that overall SME business confidence slumped by 15% over the last 18 months, with many businesses citing concerns about a slow domestic market.
The index, which takes into account firms' anticipated orders, revenues and profits for the next two quarters, revealed a confidence rating of 38% – a five-point decline from the previous indexes in July and January 2015.
While almost a third of respondents cited declining domestic demand as their biggest business worry, more than the one quarter are concerned about falling exports, particularly because of problems caused by the relative strength of the pound against the euro.
Somewhat unsurprisingly, manufacturing-related SMEs have experienced the largest drop in confidence due to export woes. After falling 14 points to 37%, morale in this sector appears to be at its lowest level for two-and-a-half years.
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If you’re a small business owner who’d like to know more, contact Dukes Bailiffs today to begin future-proofing your business.
