Overseas demand has driven significant growth in the manufacturing output of many SMEs, says a new report.In the latest Confederation of British Industry’s (CBI) quarterly SME trends survey, the data shows that manufacturing output and total orders among smaller businesses rose by their fastest rate for over a decade.Over the three month period, 37 per cent of SMEs said that output had increased, while 18 per cent said it had fallen. The last time there was a positive net balance of 18 per cent was in July 1995.However, according to the CBI, many small businesses are less confident about the future. Many expect job losses and a slow down in growth. As a result, many smaller businesses are scaling back their investment projects."Smaller businesses have recovered from a dip in October to deliver a very strong quarter. The growth in demand has also cut more manufacturers the slack they need to raise prices, restricting the impact on profit margins of the continued increases in costs," explained Steve Sharratt, the chairman of the CBI’s SME Council.However he warned that the future could be difficult for manufacturing SMEs, saying: "Medium-sized firms do seem to be enjoying more favourable overseas demand, but all firms are more concerned that prices will constrain exports, particularly with the stronger pound."Recently, the Office of National Statistics reported that overall the UK’s trade deficit widened in December 2006 to £4.9 billion. For all of 2006, the UK’s trade deficit increased from £44.6 billion to £55.8 billion.© Adfero Ltd

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