New research reveals impact of global uncertainty on UK’s SME manufacturers
UK manufacturers have been hit by a sharp decline in sales, according to new research – reflecting a drop in business confidence due to the conflict in Iran.
Small and mid-sized firms saw their average sales revenue fall by 39% in the first quarter of the year, following months of stability and growth.
Average sales revenue only just surpassed £250,000 – in contrast to the previous quarter when it stood at £411,430. It was also down 30% year-on-year.
The figures appear in the latest manufacturing report from inventory management specialist Unleashed, an inventory management software platform popular with small and mid-sized manufacturers, wholesalers and distributors. Its quarterly report is based on data from more than 600 UK firms using the software, across 12 manufacturing categories such as food and drink, clothing and fashion, and construction.
Manufacturers in the furnishings category fared worst, with revenue plunging by 61% from £239,280 to just £92,410. Construction industry suppliers were next, seeing their revenue falling by more than half (57%) from £486,638 to £209,662.
Weak sales were matched by an overall contraction in purchasing and stock on hand across all manufacturing categories QoQ, suggesting that buyers are newly-cautious about the months ahead.
Total purchasing was down by an average of 29%, while stock on hand declined by around 19% to £198,542. Similarly, profitability was down from 39.4% to 30.08% – the lowest on record. The only positive was the drop in lead times from 19 to 16 days in the first quarter of the year.
Commenting on the figures, Joe Llewellyn, GM of ERP Small Business at The Access Group, the parent company of Unleashed, said: “Tensions in the Middle East, including the Strait of Hormuz blockade, have created significant market uncertainty – and our data suggests this is now taking its toll on manufacturers. Having started the year on a growth footing, the first quarter of the year saw the biggest drop in sales revenue we’ve recorded since 2024. With fuel prices already up, and energy prices expected to rise later this year, the coming months could reduce confidence, increase costs, and squeeze margins even more. While many SMEs have slim buffers to weather these changes, our data suggests they’re taking steps to mitigate the impact by reducing stock on hand to protect their margins.”
View the full Unleashed Manufacturing Health Index report.