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SMEs ‘face deteriorating business conditions’

Small and medium-sized manufacturers have experienced a drop in output, and levels of optimism have also fallen, according to a new report from the Confederation of British Industry (CBI).

The latest quarterly SME Trends Survey from the CBI shows that while 23% of manufacturers reported an increase in output volumes in the three months to July, 28% reported that they had fallen. The balance of -5% represents the first fall since October 2009.

Optimism was also seen to have dropped significantly, compared with an improvement in the previous quarter.

Investment plans were correspondingly lower, with investment in plant and machinery set to fall to its lowest level in three years.

Despite the challenging conditions, small manufacturers did increase staff levels in the quarter to July, although many do not expect to take on new staff in the coming quarter.

Lucy Armstrong of the CBI said, ‘Challenging domestic conditions, continuing uncertainty over the eurozone, and a broader loss of momentum in global growth, are clearly taking their toll on the UK’s smaller manufacturers’.