National Business Survey highlights increased business optimism for 2010

Posted on: 01st March 2010

As Manufacturing Week launches today, 1 March 2010, the largest survey of businesses in England and Northern Ireland has revealed that manufacturers have the most positive outlook for the next year, compared to other sectors.

With 37% expecting the climate to improve and 41% believing it will remain stable, this optimism has been created due to better exchange rates helping exporters and improved demand. Expectations of domestic orders have improved across all sectors, but the manufacturing sector in particular has benefited.

The survey of over 5,300 businesses, by Ipsos MORI on behalf of the Regional Development Agency Networkand Invest Northern Ireland, is the largest of its kind, asking businesses about their performance, opportunities and issues. The report has found that nationally, businesses are more optimistic about their prospects than at any time in since June 2009, with 29% expecting the business climate to improve in the next 12 months.

In the Northwest, the survey highlight signs of recovery, with more businesses in the region reporting improved business performance in the last 12 months, compared to the previous wave (19% in November 2009 compared to 16% in June 2009). This is reflected in an increase in the number of businesses reporting a higher volume of output, export orders and profit margins over the past 12 months.  

Looking to the future, business optimism is increasing, with more than a quarter of businesses (27%) expecting improved business climate – this compares to only 10% of businesses a year ago. Manufacturing, hotels / catering and public / personal services are the most optimistic in the region, with around two fifths of these firms expecting higher domestic orders in the next 12 months.

The survey also found that businesses in the region are becoming more active and are pursuing positive actions in order to keep their businesses afloat – 65% of businesses pursued new markets/customers in the past 12 months while 75% expect to do so in the next 12 months.

Steven Broomhead, Chief Executive of the NWDA, said:

“This growing optimism amongst businesses regionally and nationally is extremely encouraging. The Agency has been working vigorously to support the Northwest through the downturn and ensure it is well placed for the upturn. We acted quickly, putting in place a multi-million pound finance package to provide companies with access to finance, and it is very positive to see that business confidence is starting to return and gain momentum - further evidence that we are beginning to see some fragile seeds sprouting for recovery.

However, there are no easy quick fixes and we recognise that significant challenges remain regionally and nationally. The Agency will continue to provide the strategic leadership, investment and support, working closely with Government, to ensure that the region emerges from the downturn stronger than before.”

Whilst there are continued challenging conditions facing businesses in England and Northern Ireland, fewer businesses reported deteriorating performance in November 2009 compared to June 2009. This is a sign that a stronger operating environment and more favourable demand conditions are beginning to impact business positively. The survey provides strong evidence that market conditions are stabilising with 20% of businesses reporting improvement in performance compared to 16% in June 2009.

The recovery could be arriving just in time as research shows that businesses have been stretched to their limits by the recession, and there are concerns about the effects of any further downturn. Almost a third (31%) feel that they are not well placed to weather another dip in economic conditions. Indeed, the number of firms at risk has grown since June 2009; where 26% felt they were not well placed.

However, the positive impact of these tough market conditions is that over two thirds (68%) of businesses have been motivated to pursue new markets and customer as a direct result of the economic crisis. These business practices will enable business to grow strongly as the recovery continues.

Demand for finance is increasing, although it is unclear whether the finance will be used to fund expansion or as a lifeline to allow businesses to continue trading. The RDA/Ipsos MORI survey shows a fifth of firms will need to raise new sources or renegotiate existing finance or credit in the next twelve months.

Larger businesses are finding it easier than smaller businesses to access finance or credit. At the same time larger businesses, those with more than fifty employees are continuing to perform better than smaller businesses, highlighting the need to support companies of all sizes to maintain a more stable economy.

The survey shows that businesses that use Business Link are likely to perform better, with 35% of businesses who said their performance improved over the last 12 months having used Business Link. A further 27% of businesses are planning to use Business Link services over the next 12 months.

The good news is that cash is now starting to flow more strongly across the supply chain. The survey reveals that fewer firms are delaying payments to their suppliers and are receiving payments more quickly from customers.

Ben Page, Chief Executive, Ipsos MORI, said: “Our research continue to show a growing optimism amongst businesses that economic conditions are finally getting better. Access to finance when it is needed will help to keep businesses afloat.”

To view the report go to http://www.nwriu.co.uk/2788.aspx