SME Confidence Highest In A Quarter Century

Confidence levels among the owners of small manufacturing businesses are rising at the fastest pace in 25 years, according to the Confederation of British Industry’s (CBI) recent survey.

In the three months to October, the CBI’s SME Trends Survey found that optimism among small firms rose to 35 in the quarter, up from 9 in the three months to July, making it the fastest rise since records started in 1988, as in the same period last year the index was as low as -12.

Total new orders increased in the three months to October for the first time since July 2012, driven by domestic orders, which rose at their fastest rate since January 1995.

Meanwhile, export orders rose at their fastest rate since April 2011, while optimism around export prospects for the next twelve months increased strongly.

Alongside the improvement in demand, output rose modestly and is expected to pick up at a faster pace over the next three months, accompanied by a further improvement in orders.

Because of the greater optimism and activity among SMEs, there has also been a steep change in investment plans for the year ahead, with forecasts for spending on buildings, plant and machinery, product innovation and training all in positive territory, while plans for spending on buildings turned positive for the first time in the survey’s history.

Meanwhile, another recent survey has shown that business confidence continued to improve in October and is expected to rise still further in the final quarter of this year.

It suggested that an increase in new export orders from Europe in recent months has helped the economy to grow, as well as strong results from the manufacturing and services sub-indices.