Manufacturers are looking to invest in plant and machinery.
SME manufacturers looking to invest in 2017
Posted: 5th February 2017
Smaller manufacturers plan to boost investment this year as total orders and volume of output increased in the three months to January, the latest CBI SME Trends Survey has revealed.
Looking forward, domestic and export orders are both expected to grow more strongly in the next quarter, with production set to rise again, the survey of 335 small and medium sized businesses suggests.
Companies planning to invest on buildings for the year ahead rose to record levels while those looking to invest in plant and machinery also strengthened further.
Stephen Gifford, CBI director of economics, said: "As the recovery takes hold, the investment cycle is starting to turn.
"It's encouraging to see smaller manufacturers planning to boost investment, particularly in their plant, machinery and buildings.
"Orders and output continued to grow at a healthy pace, although not as fast as predicted. However, firms remain optimistic about prospects, with growth in orders and production expected to accelerate."
Key findings of the survey
- 37% of firms reported an increase in total new orders and 23% said they decreased, giving a balance of +14%
- 34% of firms reported an increase in domestic orders and 26% said they decreased, giving a balance of +8%, a slower pace of growth than in the previous survey (+20%)
- 23% of firms said export orders increased and 30% said export orders fell, giving a balance of -7%
- 30% of firms said output increased and 24% said output decreased, giving an overall balance of (+6%), a broadly similar result to the previous survey (+8%), with growth predicted to pick up in the next three months (+14%)
- Optimism continued to rise for the third consecutive quarter: 34% of respondents said they were more optimistic than three months ago and 13% said they were less optimistic giving a balance of +21%: a more moderate rise in sentiment than in the last quarter (+35%, which was the fastest rise in optimism on record)
- Manufacturers' investment intentions have improved significantly further on the previous quarter, with plans to spend on buildings (+14%) at their strongest since the data began in October 1988 and plant and machinery investment intentions (+14%) at their strongest since July 1995
- Numbers employed grew slightly (+4%), disappointing expectations of faster growth (+14%). Headcount is expected to increase moderately again in the coming quarter (+6%)
- Average unit costs were flat on the quarter (0%), the lowest result since 2000 and are expected to rise modestly in the coming quarter (+8%)
- Average domestic prices remained flat (0%) for the fifth consecutive quarter, while export prices fell somewhat (-9%). Domestic prices are expected to rise in the next three months (+12%), while export prices are set to be unchanged (+3%)