SMEs see improved production with larger cost pressures

However, firms are now said to be facing strong cost pressures, which are feeding through to higher domestic and exported goods prices.

The CBI’s latest SME Trends Survey reveals that 30 per cent of the 366 respondents said the volume of output rose and 17 per cent reported a fall, giving a balance of +13 per cent. That was slightly weaker than expected but stronger than the balance of +9 per cent recorded in the previous quarter.

Output was lifted by an improvement in domestic orders growth, with 28 per cent of firms reporting a rise in volumes and 20 per cent a fall, giving a balance of +8 per cent.

Export orders also rose modestly, with 29 per cent of SMEs reporting a rise and 20 per cent a fall. The resulting balance of +9 per cent was down marginally on the previous quarter.

Cost pressures since early 2010 have weighed on profit margins and average unit costs increased sharply again, leading to a noticeable rise in average domestic prices and average export prices.