Confidence is rising among small businesses as demand and orders improve, according to a new snapshot of the sector by the CBI.
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The CBI said conditions for the UK’s small and medium-sized (SME) businesses stabilised over the past quarter after deteriorating in the previous quarter.
The survey of 441 firms shows total new orders and new domestic orders edged up slightly in the three months to April, while export orders fell again.
But optimism about demand for exports over the year ahead also rose for the second quarter, with SMEs expressing greater confidence than larger firms.
Output was flat among small and medium-sized manufacturers, in line with the performance of the rest of the manufacturing sector, following a quarter in which they outperformed the sector as a whole. Expectations for the quarter ahead remained strong.
Against this backdrop, investment intentions strengthened, with replacement and efficiency among the primary drivers of investment, while hiring intentions remain firm. However, concerns about skills shortages have picked up as a potential drag on output, said the CBI.
Rain Newton-Smith, CBI director for economics, said: “Higher spending on training is often a sign that skills shortages are biting again.
“This further underlines the need for business and government to work together in the coming months and make sure we get the design of the apprenticeship levy right, so it can deliver the quality skills training that firms need.
“While the depreciation of the Pound since mid-2015 will be welcomed by exporters, the Government could and should do more to help by establishing an exports commission that can look at the challenges and opportunities for exporters more closely.”