Gloomy outlook to prompt contractor hiring?

Manufacturers might start to consider taking on more contractor workers in the face of the gloomy economic outlook.

According to the latest quarterly SME Trends Survey from the CBI, 25 per cent of respondents stated that output fell in the three month period, while just 26 per cent said that it rose. This leaves a balance of +1 per cent, marking the first time that output has not risen since April 2010.

Unfortunately, many of the problems affecting output appear to be out of the control of the businesses concerned. Export orders fell for the second quarter running, while domestic demand also declined and is expected to fall further over the next quarter.

This is largely due to political and economic turmoil abroad, which, combined with the fragile condition of the UK economy, is weighing heavily on the manufacturing sector. Sentiment about the general business situation fell for the third quarter in a row, with a balance of -20 per cent of firms less optimistic than they were three months ago.

Lucy Armstrong, chair of the SME Council at the CBI, commented: "Sentiment among small and medium-sized manufacturers fell sharply again in the past three months, brought down by rising concerns about the ongoing Eurozone crisis, which has led to falling orders and stagnant output.

"While figures for the next three months point to some stabilisation, the manufacturing sector is still facing significant headwinds, which can only add to existing uncertainty over demand and growth."