• Chink of light on jobs front as more small firms recruit rather than let people go this quarter
• Continuing improvement in small business sentiment, despite serious pressures
• Services & Manufacturing Sectors are more positive than Retail Distribution

The Small Firms Association (SFA) has released the findings of its Summer Small Business Survey. Commenting on the figures, SFA Director, Patricia Callan stated, “the overall survey results show a continuing improvement in the sentiment of small business owner-managers; however many remain under serious pressure.”

The survey was conducted during May and a total of 592 companies employing 12,750 people responded. The sample was drawn from manufacturing (29%), retail distribution (29%) and services (41%) sectors and from a regionally representative sample, with all parts of the Irish Republic included. The results are presented as simple balances of the difference in percentage points between positive and negative responses. A positive balance indicates that more firms responded positively rather than negatively to a particular question.

ON JOBS

Some 23% of respondents expect to recruit temporary staff in the next three months with 15% of respondents expecting to recruit permanent staff in the same time frame. The employee numbers index improved to above balance (+3) in the current quarter from -1 in Q1 2011, indicating a more positive outlook with regard to staffing levels in the next three months. “This is the first time since the series began in Q1 2009, that more companies have indicated they would employ staff in the next three months than let staff go”, commented Callan.

The proportion of respondents implementing lay-offs (3%) and short-time working arrangements (8%) now stand at their lowest levels since the series began. The percentage of companies implementing compulsory redundancies (3%) have decreased appreciably since 2009 when more than one in five companies (22%) indicated they would be implementing compulsory redundancies in the next three months. The percentage of companies implementing voluntary redundancies (4%) is broadly in line with the levels of the last two years.

Callan stated that “The Government’s Jobs Initiative and in particular the halving of the lower rate of employer’s PRSI has been well received by small businesses and they are now responding with real job creation. The Government must continue to improve the competitive environment in which small businesses operate, cutting costs wherever it can. This is the only way to solve the jobs crisis”.

ON BUSINESS SENTIMENT

Companies view on the overall business environment currently improved slightly in Q2 2011, rising to -20 from -22 in Q1 2011, buoyed by a significant improvement in sentiment amongst services sector companies. However, confidence in the overall business environment from respondents from the manufacturing sector fell for the first time since Q4 2009 with the outlook from the retail distribution sector the weakest of all. The current index shows a significant improvement on this time last year (-46 in Q2 2010). The outlook for the next three months fell slightly (-17) compared to (-15) in Q1 2011.

Companies rating of their own business fell to +9 from +15 in Q1 2011, mainly due to a fall in sentiment amongst retail distribution sector respondents. Manufacturing and services sector respondents remained at a similar level to Q1 2011 remaining positive at +22 and +18 respectively. Although companies continue to rate their own business more favourably than the overall business environment, both rating of own business indices fell slightly in the current quarter on the back of decreased sentiment in the distribution sector. The future looking rating made by companies of their own businesses also fell in this quarter, to +13 from +19 in Q1 2011. This was caused by a sharp fall in sentiment by retail distribution sector respondents in this quarter.

While most business activity indicators remained at similar levels to the previous quarters, the level of companies decreasing their unit selling price continues to slow. While total sales and customer base indices remained at the same level as Q1 2011 and at series high levels, while order books fell slightly to (+12) from (+18) in Q1 2011.

Callan stated “The export/domestic trading sectors divide is becoming more apparent daily. There is an urgent need for the government to create real confidence amongst consumers and businesspeople, by being clear about expected levels of taxation, social welfare cuts and public expenditure cuts over the next 3 years, so that they can plan their own spending accordingly. Without some level of certainty, our savings rate will continue to rise (currently 12% - optimal is 5-6%), and domestic demand will continue to shrink causing more job losses particularly in the retail distribution sector. Citizens are highly educated and do not believe the government rhetoric – without a believable story, spending, which is essential to our economic growth will not return to the Irish economy.”

For further information, please contact:

Patricia Callan
Director, SFA
Telephone : +353 1 605 1602
Fax : +353 1 638 1602
Email : patricia.callan@sfa.ie
Websites:
http://www.sfa.ie,
http://www.sfa.ie/awards,
http://www.centreofexcellence.ie,
http://www.betterbusiness.ie
Postal Address:
Confederation House,
84/86 Lower Baggot Street,
Dublin 2.