Job losses accelerate among smaller manufacturers says CBI

Orders and output expected to fall sharply in next quarter

In the three months to January, employment, the volume of total new orders and output among manufacturing SMEs fell at their fastest rate since the early 1990s, and firms expect the next quarter to be even tougher.

Russel Griggs, Chairman of the CBI’s SME Council, said: “The jobs picture among smaller manufacturers has deteriorated markedly since last July in the face of rapidly declining demand for UK-made goods at home and abroad. 

“Firms are steeling themselves for a very difficult few months with output and orders expected to fall at a record pace in the next quarter. As a result, job losses are expected to accelerate among SMEs. 

“This survey closed before the Government’s measures to kick-start lending across the economy were announced and we hope these will soon begin to make it easier for firms struggling to access the credit they need to go about their day-to-day business. Only the availability of credit will help stem the tide of job losses.”

Seven per cent of the 492 firms surveyed expanded their workforce during the quarter, while 38 per cent reduced their headcount. The resulting balance of -31 per cent represents the steepest quarterly fall in employment since January 1992. The volume of total new orders during the quarter slumped at its fastest rate since July 1991, with 13 per cent reporting an increase and 54 per cent a fall, giving a balance of -41 per cent. This was on the back of shrinking volumes of domestic and export orders (a balance of -45 per cent for domestic orders and -21 per cent for export orders). That had a knock-on effect on output (a balance of -34 per cent is the lowest figure
since July 1991) and seven out of ten firms are working below capacity.

Optimism about the business situation fell at its sharpest rate since the survey began in October 1987 (a balance of -71 per cent, compared to -57 per cent in October). 
Looking ahead, expectations for volumes of total new orders (a balance of -56 per cent), output (a balance of -46 percent) and employment (a balance of -38 per cent) in the next quarter are the weakest in the survey’s history. 

Average domestic prices were lower for the first time in three years as cost pressures have eased and firms struggle with weaker demand. A balance of -6 per cent of firms reported a fall in average domestic prices, down from October’s figure of +16 per cent. 

Weak demand continues to be the biggest constraint on output in the next quarter, with orders or sales cited by 85 per cent of firms. Eleven per cent of firms are concerned access to credit and finance is likely to hamper output in the next quarter, up from 6 percent in October.

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