Optimism ‘waning’ among SMEs

CONFIDENCE levels among small firms worsened slightly in the second quarter of the year, according to a new survey.

The latest edition of the quarterly business trends survey from small business lobby/representative group, ISME paints a largely negative picture — in that optimism is waning among SMEs and companies are continuing to shed jobs.

However, it added that the actual level of jobs losses amongst SMEs stabilised during the quarter, while the number of companies investing is on the rise.

This positive move, though, seems restricted to those firms who are exporting.

ISME said that its latest trends survey shows that the gap between the performance of domestic-led firms and export-driven companies is widening. Some 4% of companies are less confident about their business prospects than in the first quarter, when only 1% were pessimistic about the future. Again, most of the less confident firms are involved solely in the domestic economy.

ISME’s head of research, Jim Curran said that the latest results are actually slightly more positive than recent editions of the survey and that employment forecasts, for the SME sector, are better than they have been for a number of quarters.

“The results, however, shouldn’t mask the significant difficulties that continue to plague companies, particularly those involved primarily in the domestic economy — with a clear divergence between their performance and those involved in exporting. The results highlight that there’s a widening gap between the performances of domestic based companies and the export sector,” he added.

“Overall, for companies involved in exporting, the indications are that the future is relatively bright. For all others, the ongoing economic uncertainty, negative consumer sentiment, record savings levels and general economic conditions are putting enormous pressure on businesses with many just holding on,” according to Mr Curran.

ISME said that over 30% of firms expect conditions here to deteriorate.