Business activity at the U.K.'s small and medium-sized enterprises was weaker than expected in the three months to April with both output and new orders declining, a survey by the Confederation of British Industry showed Tuesday.
According to the industry group's latest SME Trends survey, the decrease in total new orders was driven by falls in both domestic and export demand. Output also fell for the fourth consecutive quarter.
Despite the disappointing performance, optimism about the overall business situation has steadied, following three quarters of decline. Optimism about export prospects rose for the first time in a year, the survey report said.
Employment in the sector ticked up in the three months to April, and manufacturers expect a modest increase in staff levels in the coming quarter.
The survey also found that both domestic and export price inflation were broadly the same quarter-on-quarter, but growth in average unit costs was the fastest since October 2011. This squeezed manufacturers' profit margins once again and this pressure on margins are expected to persist in the coming three months.
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