Small firms feeling cost pressures
Monday, 12 May 2008 09:35
Small firms are putting up their prices
A survey by the CBI out today reveals despite being forced to increase prices and seeing demand falling from overseas and domestically, small firms are particularly active in hiring new staff.
The CBI SME Trends Survey reveals optimism among owners of small firms has fallen again to a balance of -20 per cent.
Russel Griggs, chairman of the CBI's SME Council, said: "The uncertain wider economic climate has resulted in some mixed findings.
"What is certain is that small and medium-sized manufacturers are continuing to feel the impact of higher fuel and raw material costs, and that they are now having to pass these on to customers."
The research also shows a balance of 20 per cent of firms have raised UK prices in the last three months – the strong rise since 1995 – and a similar number of firms expect to up prices in the coming quarter.
The level of export orders fell in the last three months – despite the weakening pound making exports cheaper for foreign buyers – with medium-sized firms seeing the highest fall in foreign orders since 2002.
"While the drop in export orders is worrying, particularly for medium-sized firms, there are some more encouraging signs: smaller firms have been quite bullish about taking on extra staff, and some growth in output is forecast for the months to July," said Mr Griggs.
The CBI found 12 per cent more small firms were taking on more staff, while medium sized firms were making job cuts.
SME manufacturers expanded their workforce over the past three months, but there was a stark difference between the smaller firms - where a balance of +12 per cent taking on more staff was the highest since April 1995 - and the medium-sized firms, where a net eight per cent cut jobs.