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May 24, 2013

Optimistic outlook for UK manufacturers

Growth prospects for SME manufacturing businesses in England are at a twelve-month high, according to the latest Manufacturing Advisory Service (MAS) Barometer.

The MAS research has found that 64% of companies are expecting to increase sales over the next six months. And recent performance has been strong too, with 47% of the 700 firms who took part in the survey reporting a rise in sales turnover (+4% on the previous quarter). In addition, 93% of manufacturers are looking to take staff on or keep workforce levels the same.

Appetite for investment has also seen an upturn, with 39% planning to boost spending on new technologies and 48% intending to invest in new machinery and premises – both up 4% on the same period last year.

Michael Fallon, business and energy minister, said: "As we see through the latest MAS Barometer, business confidence is on the rise, particularly amongst SMEs, indicating that manufacturers are becoming more optimistic about their future growth plans."

Despite the optimism, SME manufacturers are facing significant challenges. More than half of firms (52%) cited poor profit margins as the main issue they faced, followed by an inability to meet lead times (30%).

Lorraine Holmes, area director for MAS in the North and West, said: "There appears to be a greater appetite from SMEs for investment in order to remain competitive and I think we are also seeing a desire to create jobs to meet expected demand."

Nigel Jump, chief economist at Strategic Economics, said: "The UK economy remains difficult. However, the latest MAS Barometer is more positive. Enquiry levels and turnover among SMEs are better than in the previous survey and, on virtually all measures, the report's trends have turned upwards from the same period six months ago. It points to wider recovery and reduction in barriers to growth this summer."

MAS is funded by the Department for Business, Innovation and Skills (BIS).