SME business confidence continues to improve

SME business confidence has continued to improve for the third quarter running, with a net 1% of companies less optimistic about business prospects in comparison to a net 13% in the previous quarter.

However, 57% still view the business environment as either poor or very poor, with 30% expecting conditions to deteriorate over the next 12 months.

According to small business group ISME’s first quarterly trends survey for 2011, both the retail and construction sectors remain the least optimistic, with a 17% of retailers and 16% of construction companies less confident about their business prospects. A net 9% of manufacturing companies are more optimistic, in comparison to a negative figure of 14% in the last quarterly survey.

Four percent of service companies are more optimistic in comparison to 5% reporting reduced confidence levels previously.

The survey also found:

- The SME sector continues to shed jobs but at a slowing pace, with 18% of companies reducing employment, compared to 21% in the previous quarter.

- 9% of companies expect to shed jobs over the next 12 months compared to 13% in the last quarterly survey in 2010.

- There is no change in investment by SMEs, with 24% of companies reporting an increase in investment levels, with 24% reporting the opposite.

- 50% of companies outlined that sales are down, an improvement on the 55% reported in the previous survey.

- Exports continue to remain strong, with 17% of companies reporting an increase in export values.

ISME head of research Jim Curran said: “The survey results are a mixed bag, confirming that a strong export performance continues to be offset by a continuing sluggishness in the domestic economy.

“The labour market continues to be weak, with little evidence of significant job creation over the next number of months.

“It is quite clear that companies, mainly those involved specifically in the domestic economy, are canceling or delaying decisions on investment and employment, with many continuing in ‘survival mode’.”

Mr Curran added that the next few months will be crucial to the survival of small companies.

“With general confidence at an all-time low, what is required from a business perspective is a clear roadmap outlining effective political leadership and achievable policy making, with a commitment to get the country back up working again,” he said.