Business Confidence down 6 points despite increases in 8 of 12 Key Indicators.
Employment Indicators are at their highest since autumn ’07.
Economic Uncertainty still a major concern for SMEs.
Retail Sector continues to be a concern.
ISME Wednesday 9th July, 2014
The results of the ISME Quarterly Business Trends Survey for summer 2014, released today (9th July) show increases in 8 of the 12 Key Business Indicators, a further 2 indicators remained steady while 2 showed decreases. Employment indicators are at the highest since before the recession, however the Association cautioned the Government that economic recovery will be gradual and any meaningful growth will require cost curtailment, particularly in relation to state-influenced business costs and wage demands.
The survey was conducted in the last week of June, with 826 SME respondents. 54% of the respondents employ less than 10, while a further 38% employ between 11 and 50 and the remaining 8% employ between 51 and 250.
While Business Confidence has dropped 6 points and Profitability Expectations dropped one, Business Expectations show a 2 points increase and the current Business Environment, while still negative, has also improved.
Current Employment shows an 8% increase and Expected employment growth has increased 9 points to 27%.
In this quarter Current Sales have remained steady at +11%, while future sales remain very positive at 30%.
Current and Future Investment remain steady.
Exports, both current and expected, show a substantial increase, continuing the general positive trend. Current Exports went from 18% to 32% and Export Expectations went from 46% to 55%.
According to Mark Fielding, ISME CEO, “SMEs are making progress at a slow pace and economic recovery is far from guaranteed at present. The recently released Exchequer figures certainly show improvements but, as a nation, we continue to borrow more than we generate on an annual basis.
This is certainly a cause for caution and while CSO figures have been showing positive developments it is far too early for complacency.”
“Owner-managers and consumers need some certainty with regard to their future costs so that they may plan their finances accordingly. There has been much speculation about the necessary budgetary adjustments for 2015 and the areas which might face cuts or increases. Government needs to step in to reassure businesses and consumers that no new taxes or charges will be announced in October. Uncertainty about the future is what stifles consumer spending and halts business expansion and employment plans.”
“Government cannot rely on PR spin and cheerleading alone to generate a boost to the economy. Fiscal prudence must be the order of the day so that confidence is restored. Politicians will be tempted to make decisions based on re-election aspirations rather than economic best practice in the coming months. These temptations must be ignored as growth is too fragile to take for granted. The facts remain that SMEs continue to be burdened with excessive and uncompetitive cost structures and these, as well as growing pressure for wage demands, must be curtailed.”
“While the overall economy is recovering strongly, the domestic portion continues to lag behind, due mainly to a lack of consumer demand in the after-shock of the Great Recession and a dearth of bank lending to the SME sector. The expectation is that domestic economic growth will gather momentum in the second half of 2014, in the absence of external geo-political shocks and internal mismanagement by an administration focussed on re-election.”
“While the overall economy is recovering strongly, the domestic portion continues to lag behind, due mainly to a lack of consumer demand in the after-shock of the Great Recession and a dearth of bank lending to the SME sector. The expectation is that domestic economic growth will gather momentum in the second half of 2014, in the absence of external geo-political shocks and internal mismanagement by an administration focussed on re-election.” “The re-shuffled and hopefully reinvigorated Government must ignore the left wing calls for a stop on Austerity, meaning more government spending funded by higher taxes, higher wages and borrowed money. The need for prudent economic management is paramount, which entails living within our means, incentivising work, investment and entrepreneurship.”
The Association called on the Government to assist the recovery by:
Reducing government influenced business costs to below the EU average.
Tackling the banking crisis to ensure real measurable access to credit for viable SMEs.
Outsourcing more state sector services to SMEs.
Reforming the social welfare system to make it more profitable to work.
Expanding the export capacity of the SME sector through soft supports.
Ensure that the transition from CEBs to LEOs runs smoothly and does not have a negative impact on the services offered to SMEs.
Attacking the scourge of ever-increasing black economy activity.
“The Trends in this survey are certainly positive overall, SME businesses are creating employment and indicating an appetite to employ more. The Government’s job is create the environment in which this can happen, through employment tax improvements, business incentives and a cap on state influenced business costs,” concluded Fielding.