Output from SME manufacturers grew at the fastest pace on record in the three months to July 2021 according to a CBI survey, reflecting increasing confidence despite major struggles.
A quarterly trend survey polled 234 SMEs across the country, revealing the highest output growth rate since at least October 1988, when the survey began.
The survey also found that the total volume of new orders increased at the quickest rate ever recorded, buoyed by a record rise in domestic orders and the quickest growth in export orders for over decade.
Despite ongoing struggles around supply disruptions and price pressures, optimism in the sector is strong, with investment intentions for new plant and machinery improving to the highest rate on record.
Capital spending on training over the next 12 months is also expected to grow faster year-on-year than any period since 1997.
CBI Lead Economist Alpesh Paleja said:
“The economic recovery has given a significant boost to SME manufacturers, with firms reporting record growth in activity. Buoyant demand has led firms to kick-start their investment plans and increase headcounts. The outlook further ahead is also positive, as businesses expect activity to continue to grow strongly.
“However, mounting staff shortages, rising cost pressures, and shortages of raw materials due to supply chain disruptions are posing a real challenge to the outlook.”
Multiple industry sources have reported that a vast array of items - including chemicals, commodities, cardboard, electronics, food, metals, packaging and timber - are currently increasing in cost due to a ‘perfect storm’ of delays and shortages.
Commenting on the supply difficulties in July, Rob Dobson, Director of market intelligence provider IHS Markit, explained:
“On one hand, manufacturers are benefiting from reopening economies. This is leading to solid inflows of new work from both domestic and overseas markets, including the US, the EU, China and the Middle East. On the other, the recent surge in global manufacturing growth has led to another month of near-record supply chain delays, exacerbated by factories and their customers building up safety stocks.”
Greater Manchester manufacturers suffering supply chain problems are encouraged to contact our specialist Manufacturing Service for fully-funded advice and guidance.