Surveys show business confidence up

Small and medium-sized firms are feeling more confident about their future despite continuing to find trading difficult, according to two new surveys.

ISME’s third quarterly trends survey of over 500 companies reveals that the business environment remains tough with job losses continuing, sales still weak and profits and revenue under sustained pressure.

However, the study also indicates that business optimism is improving, while there has been an increase in investment, and export values

According to the survey, 37 per cent of SMEs remain pessimistic about their future compared to 56 per cent in the previous quarter.

Not surprisingly, firms in the construction sector expressed the least amount of confidence with 73 per cent saying they were concerned about their prospects. Approximately 60 per cent of companies in the retail sector expressed doubts about future growth while 48 per cent of service-orientated firms and 44 per cent of organisations working in distribution were also pessimistic about the months ahead.

Overall, the current business environment is viewed as ‘poor’ or ‘very poor’ by 69 per cent of respondents, down slightly from the 74 per cent recorded in the previous quarter. In addition, just under a quarter of firms surveyed said they expect business conditions to improve over the next 12 months, while 44 per cent said they expect things to get worse.

Almost two-thirds of respondents warned that the viability of their business was under threat over the coming years if present conditions persist.

Approximately 60 per cent of SME’s said have cut jobs over the past year while just 6 per cent took on new staff with 80 per cent of companies in the construction sector saying they had let employees go during the last 12 months.

Nearly 40 per cent of small and medium-sized firms said they expect to make redundancies over the next year, compared to 43 per cent during the last quarter.

The Isme study hows that 83 per cent of firms said turnover was down on the same period last year in comparison to only 8 per cent who have increased sales. However, 25 per cent of companies said they expect sales to rise over the next 12 months.

A separate survey of 330 companies conducted on behalf of the accountancy software firm Big Red Book shows that 83 per cent of firms are not expecting to make redundancies over the next six months.

However, over 50 per cent of the companies surveyed said they anticipate implementing further pay cuts.

In addition, almost half the number of companies surveyed said they expect profitability to remain the same or to increase during the next six months.