A revival in domestic demand together with a year end push and a pick up in export orders all helped small and medium sized manufacturers to get off to a good start in 2006, according to the 'PKF SME Index', a quarterly survey of 800 SMEs operating in the manufacturing, construction and service sectors. The sector's output growth rose from 53.1 in Q4 2005 to 54.2 (where marks above 50 indicate expansion and marks below 50 indicate contraction), the highest score for nearly two years. The level of new business orders also rose from 52.5 in Q4 to 53.7 in Q1.
This is below the average performance of all SME sectors of 55.2 but it does reflect the continuing improvement in market conditions over the last three quarters.
The main reasons for the uplift appears to be stronger domestic demand from customers partly because of the pressure to spend budgets before the end of the year and partly as a result of companies' own sales and marketing campaigns.
Other sources of new business are the Ministry of Defence, UK power stations and export markets such as the Far East and China.
Although many manufacturing companies are taking on additional manpower, overall employment levels within the sector are still contracting as the sector struggles to keep down operating costs.
Staffing levels have now fallen for the fifth quarter running (48.0) as companies cut down on temporary labour and outsource production to European countries where labour costs are cheaper.
Input costs continued to rise steeply during the quarter to 64.7, up from 60.8 in Q4.
Energy-related costs feature most strongly on the list of price rises, as they do for the other two sectors in the survey.
According to a recent PKF energy survey, fuel costs rose for 92% of SME respondents during the last 12 months by an average of 22%.
PKF partner for growing business, Toby Stephenson, commenting on this quarter's survey results said: 'It is good news that the SME manufacturing sector is enjoying more favourable market conditions after a rocky ride last year.
However, the spectre of rising energy costs is not going to go away and the pressure to reduce them in order to maintain competitiveness is rising.
While SMEs cannot control the prices charged by suppliers for energy, they can make more effort to reduce their own requirements and become more energy-efficient.
All businesses should be reviewing these on an ongoing basis and seeking the most effective ways to curb the ever-increasing burden on both their costs and the environment.' Copies of the PKF SME Index, a quarterly performance survey of small and medium sized enterprises are available free by e-mailing.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment