Output from small and medium sized manufacturers in the first quarter has fallen at the quickest rate in over a decade amid the coronavirus crisis, a survey has revealed. The number of firms working below capacity rose to its highest on record (76%) and experts warned there could be an even sharper downturn in the months to come.
Data from 301 SME manufacturers that took part in the latest CBI Trends survey showed that, on average, output volumes in the quarter to April fell at the quickest pace since October 2009.
Looking ahead, manufacturers expect output to plunge at a faster pace next quarter, marking the weakest expectations on record (since 1988). Both new domestic and export orders are anticipated to contract at a much faster pace next quarter, also constituting the weakest expectations on record.
Investment expectations for the next year for buildings and plant & machinery deteriorated to survey-record lows, as a record high proportion of firms reported uncertainty about demand as a factor to limit future investment.
Alpesh Paleja, CBI Lead Economist, said:
“SME manufacturers are seeing a sharp shock to activity due to the COVID-19 outbreak, with expectations signalling a sharper downturn to come. Nonetheless, manufacturers are doing all they can to support communities and employees during this difficult time.
“The government’s support schemes have been a real lifeline for businesses so far, and they should remain conscious of getting money to those who need it quickly. This will be a critical step to restarting the economy once it is safe to do so, which will require a strong partnership between government and business.”
