Labour and supply shortages hit small manufacturers - CBI

Small manufacturers saw growth slow in the last three months, an industry survey showed on Wednesday, after labour and supply shortages hit home.

According to the latest CBI SME Trends Survey, growth in output volumes in the three months to October slowed to a balance of 14% from July’s high of 36%.

Output remains above the long-run average of 0%, and is expected to improve in the coming quarter. However, total new orders also slowed, to 24% from 46%, with both domestic and export orders easing.

Average unit costs grew at the fastest pace in the survey’s history, meanwhile, rising to 76% from the 68% seen in the previous quarter. Costs are expected to keep rising in the next quarter.

The number of firms citing concerns about access to materials and components also hit a record high, rising from 46% to 65% - the highest rate since the survey began in 1988. The number of firms citing concerns about access to skilled labour also shot up, rising to 46% from 33%.

Alpesh Paleja, lead economist at the Confederation of British Industry, said: "The optimism of the summer has given way to an uncertain autumn for small and medium-sized enterprises in the manufacturing sector, as firms struggle with persistent supply challenges and acute cost and price pressures."

The October 2021 SME Trends Survey was conducted between 24 September and 3 November, with a total of 249 companies responding.