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The UK's small and medium-sized enterprises (SMEs) are technically in recession as skyrocketing oil prices lead to fall in demand, according to quarterly trends survey of Confederation of British Industry. 654 firms were questioned in this survey. The survey also portends much worse things to come.
Hugh Morgan-Williams, chairman of the CBI's SME Council, suggests: “Small and medium-sized manufacturers are a good barometer of future economic progress”.
The survey released recently found that only one in of eight firms is upbeat about the business outlook, while one in three are pessimistic. One in ten firms is expected to cut jobs in the next few months. Most of the job losses are expected to be with manufacturers whose workforce is anywhere between 200 and 499.
In the quarterly leading to October, output decreased in the third quarter with 35% of SME firms reporting lesser production.
Declining output, which is linked to higher oil prices, increased the average unit costs, though employers cut down staff strength for the fifth successive quarter.
The survey also found that orders fell for the third successive quarter as the decrease in consumer spending made its impact felt in the other areas of the economy. The outlook for the fourth quarter of 2005 looks anything but positive.
Meanwhile, one in four firms plan to invest lesser than usual. Two-thirds of SMEs are operating at less than total capacity
The resultant balance of -24 per cent is slightly better than July's -27 per cent, but is way down from around -2 pct in January
As Morgan-Williams puts it: “They (SMEs) are the first to feel the effects of an ill wind and the last to recover”.
Posted
on : Mon, 31 Oct 2005 10:25 GMT | General News
By : Chris Rowe
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