Good News as UK SMEs Reveal Plans to Boost Investment Over the Next Year

Written by Jonathan Trew | 14/02/14 11:48

Following on from the promising news of the recent Vistage Confidence Index, the CBI’s latest SME Trends Survey shows that the UK’s smaller manufacturers are planning to boost investment in the coming year.

The survey of 335 small and medium-sized manufacturers revealed that manufacturers’ investment intentions have improved significantly further on the previous quarter.

Plans to spend on buildings (+14%) are at their strongest since the data began in October 1988 and plant and machinery investment intentions (+14%) are at their strongest since July 1995.

Total orders and the volume of output increased in the three months to January, according to the CBI. While domestic orders rose, export orders fell.

However, in the coming quarter domestic and export orders are both expected to grow more strongly and production is set to rise again.

Vistage members more optimistic

The Vistage Confidence Index reported that 73% of firms surveyed were strongly optimistic about 2014.

Specifically owners of British manufacturing businesses continued to be strongly optimistic about the forthcoming year (69% expect the economy to improve, while 30% anticipate it will stay the same).

According to the CBI figures, Vistage members seem more optimistic than the firms who responded to the CBI survey.

This may signifiy stronger levels of confidence in the leadership of Vistage Member companies, in comparison to those survyed by CBI.

According to the CBI figure:

Optimism continued to rise for the third consecutive quarter

34% of respondents said they were more optimistic than three months ago

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).

Growth to accelerate

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."

These are the key findings for the CBI Trends 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%)
Numbers employed grew slightly (+4%), disappointing expectations of faster growth (+14%). Headcount is expected to increase moderately again in the coming quarter (+6%)