The Small Firms Association (SFA) has released the findings of its Summer Business Sentiment Survey.
Commenting on the figures, SFA Acting Director, Avine McNally stated: “The overall survey results show that the positivity felt in the first quarter remains unchanged, as many small firms remain under serious pressure.”
The survey was conducted during April and a total of 622 companies employing 13,750 people responded. The sample was drawn from manufacturing, distribution, retail and services sectors and from a regionally representative sample, with all parts of the Irish Republic included.
The results show that 59% of respondents rate the OVERALL BUSINESS ENVIRONMENT currently as ‘poor’ or ‘very poor’, while the figures remain unchanged from Q1 2010, when compared to 12 months ago sentiment has markedly improved from 74%. Just under half of respondents (53%) expect the overall business environment in the next three months to be either ‘poor’ or ‘very poor’ in the current survey. When compared to the 68% who rated in the same manner at this point last year, this indicates an improvement in sentiment. Some 16% of respondent companies expect the overall business environment in three months time to be either ‘very good’ or ‘good’, a significant increase on the 7% of November ‘09 and a 10% increase on Quarter 2 of 2009.
There is significant variation across SECTORS in regard to their views on the current business climate, with seven out of ten respondents (70%) in the distribution sector rating the overall business environment in Ireland currently as either ‘poor’ or ‘very poor’; higher than respondents from the manufacturing sector (56%) and services sector (53%). The proportion of respondents that rate the overall business environment as either ‘very good’ or ‘good’ again varies substantially between the services (13%) manufacturing sectors (19%) and the distribution sector, which are less positive as 7% only currently rate the overall business environment in Ireland as either ‘very good’ or ‘good’.
Confidence in respondent’s OWN BUSINESS in Ireland in this survey shows a drop of 7% on the Q1 2010 survey, with more than one in five companies (21%) more confident about their own business than they were three months ago. Just a quarter of respondents (26%) rate their own business currently as “very good” or “good”, similar to the previous quarter, but a significant increase on the one in ten companies who did so at this time last year. The proportion of companies rating their own business currently either as “poor” or “very poor” is again similar to first quarter 2010 but shows a significant decrease on the 60% in Q2 2009.
In relation to assessment of their business on a SECTORAL BASIS, just under a third (31%) of companies from the manufacturing sector rate their own business currently as either “very good” or “good”, an increase of 24% on the previous quarter. Almost three in ten respondent companies (29%) from the services sector rate their business as “very good” or “good” compared to 16% of companies in the distribution sector, similar levels to the previous quarter.
More than half (54%) of distribution sector companies rate their business in Ireland as “very poor” or “poor” and these levels remain unchanged since the first quarter. The figures in the distribution are significantly higher than the Manufacturing sector (32%) and the Services Sector (37%). While the firms in the Services sector have remained unchanged, businesses within the Manufacturing sector who rate their own business as “very poor” or “poor” has decreased by 10%.
Companies’ outlook for their own business in the next three months is broadly similar to the previous quarter. However when compared to the same time last year, companies are displaying a more positive outlook for the forthcoming months. Almost a quarter of companies (24%) expect their own business to be ‘good’ in three months time compared to one in ten at the corresponding point last year. The proportion of companies rating their own business as either ‘poor’ or ‘very poor’ (36%) has reduced significantly compared with this time last year (57%).
One area of the survey that is more negative than Q1 is the BUSINESS ACTIVITY INDICTORS. The proportion of companies expecting increases to turnover in the next three months are 32%, profitability 22%, domestic sales 32%, customer base 34%, order books 29% and employee numbers 9%.
While the figures for companies expecting a decrease are slightly higher than Q1. The proportion of companies expecting a decrease to turnover in the next three months are 28%, profitability 39%, domestic sales 29%, customer base 24%, order books 27%, output selling price 39% and employee numbers 28%.
Access to CREDIT, including both working capital and investment finance continues to be problematic, with the cost of working capital having increased for 20% of respondent companies in the last three months and the cost of investment finance having increased for 12% of respondent companies. One-fifth of companies (20%) have seen the availability of working capital decrease in the last three months, with some 15% indicating that investment finance availability has decreased.
McNally stated “Small businesses sentiment has remained unchanged as many still remain under pressure, as a result of being the victims of slow payment by creditors; the high cost of doing business, and at the root of it all, cashflow problems. However, entrepreneurial businesses that are well structured and well managed will see opportunity in uncertainty; but they need assistance from Government. The role of Government in the coming months will be critical in developing a business environment conducive to small business growth and expansion. They must put jobs and enterprise centre stage.”
