Trading conditions for smaller manufacturers have continued to decline, with output, employment and new orders all falling for the second successive quarter.
The deteriorating picture for small and medium-sized manufacturing in the three months to July is revealed in the CBI's latest quarterly SME Trends survey, published today.
Thes survey shows that 34 per cent of smaller manufacturers saw new orders fall, compared with only 22 per cent seeing an increase. The balance of minus 12 per cent comes on top of the minus 19 per cent reported in the previous quarter.
There is little sign of improvement ahead, with a balance of minus ten per cent expecting a further decline next quarter.
The slump in new orders comes alongside a fall in output. Thirty-three per cent of smaller manufacturers said their output had declined over the past three months, whilst 27 per cent said it had risen - a balance of minus six per cent.
The number of staff employed by SMEs also fell, with 25 per cent reporting a drop in employment levels, against 17 per cent indicating a rise. Further job losses are also expected in the sector in the coming months.
Average unit costs continued to rise for SMEs, whilst their ability to raise prices remained under pressure.
The survey followed a second CBI report released over the weekend which examined the Government's progress in delivering its goal of making the UK the best place in the world to start and grow a small business. It found that four of seven targets set by the Small Business Service had been missed.
Doug Godden, head of economic analysis at the CBI, said: "There is no let-up at present for small and medium-sized manufacturers, with lower output, orders and employment for the second quarter running. These firms also see little reason for optimism about the next three months."
The headline results of the SME Trends survey mask some notable differences in the performance of small and medium-sized manufacturers - with small manufacturers faring particularly poorly in terms of output, orders and employment. Medium sized companies actually saw a moderate rise in new orders, with output remaining static whilst employment showed a slight fall.
Export orders fell again for small firms, a trend that has shown no let-up for nine years. By contrast, medium-sized companies reported orders from overseas rising at fastest rate for eighteen months.