Exporters report trouble accessing credit

Manufacturers expect ‘sizeable falls in activity’ over the next three months after a spike in the number of exporters being hampered in accessing credit or finance, research finds.

Business sentiment, particularly among exporters, has deteriorated sharply in the past quarter dropping to the lowest since April 2009, the CBI’s latest Quarterly Industrial Trends Survey reports. It finds manufacturing orders and output are expected to fall over the next quarter, despite recent modest rises in domestic demand and production.

The survey of 446 manufacturers finds 30 per cent report that they have experienced a rise in domestic orders in the three months to October this year and 25 per cent say that they have fallen, resulting in a balance of +5 per cent.

Over the same period, export orders were flat (a balance of +1 per cent), in line with expectations, resulting in the lowest survey balance for this question since October 2009 (-7 per cent). A bleak next three months is also warned with businesses expecting both domestic and export orders to fall significantly (-13 and -14 respectively). The expected balances are the weakest since July 2009.

One factor behind the disappointing export performance, the CBI says, is the availability of export credit or finance. The proportion of respondents citing a constriction on their growth rose sharply in the latest survey to 18 per cent from 4 per cent – the highest level since October 1968.

The problem has now overtaken delivery dates (10 per cent), and quota and licences (3 per cent) as factors likely to limit export orders. Cost remains the number one factor (34 per cent) followed by political/economic conditions abroad (20 per cent).

Businesses also expect to reduce their stock holdings in the coming quarter, with finished goods stocks in particular set to be run down sharply (-14 per cent). Monthly data from the survey showed that stocks remained high relative to adequate levels (+21 per cent for the second consecutive month) – the survey balance is still the highest since June 2009 and above the long-run average (+14 per cent).

In line with expectations of falling orders and stocks, manufacturers also expect output to fall over the next three months (-11 per cent).

Ian McCafferty, CBI chief Economic adviser, comments, ‘Manufacturers saw modest growth in orders and production over the past quarter.

‘However, sentiment has deteriorated sharply, and firms expect sizeable falls in activity over the next three months. The quarterly fall in sentiment is the largest since the height of the recession in mid-2009.

‘Confidence among manufacturers is no doubt also being sapped by uncertainty over developments in the Eurozone, leading to broader concerns over global growth.’

See also: Overcoming obstacles to exporting

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

Related Topics