Nearly all (96%) of small British manufacturers have said they are experiencing difficulties as a result of rising supply chain prices, with more than half (55%) saying the issue is “major”.
Growth opportunities are also being affected as supply chain issues are affecting margins.
The proportion of small manufacturers expecting profits to rise in the next six months fell to 46% from 52% at the start of 2021.
Recruitment and transport too
About half of the manufacturing firms surveyed by business support groups South West Manufacturing Advisory Service (SWMAS) and Manufacturing Growth Programme said recruitment and transport problems were hindering growth.
“It appears we are seeing the first signs of supply chain struggles starting to hinder the upturn,” Nick Golding, managing director of SWMAS, told Reuters.
Although the report said that core trends for manufacturing appear to have stabilised, it said that SME manufacturers are under pressure from customers to maintain supplies and costs, while their own suppliers were increasing their prices.
Support is required to ensure the long-term stability of the £190bn SME manufacturing sector, the report concludes.
This includes guidance around logistics and paperwork, helping businesses deal with supply chain price changes, and help with recruitment.
Some temporary respite was provided by the news that UK inflation slowed more than expected in July, reports the FT.
ONS figures showed the price of consumer goods and services rose at an annual rate of 2% in July, compared to 2.5% in the previous month.
However, the Bank of England expects consumer prices growth to rise to 3% in August and to peak above 4% in the autumn.