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Improvement in Sales Index and expectation of significant investments signal beginning of the end of the downturn in the South East
An improvement in sentiment among businesses in the South East offers a strong signal that the worst of the recession may be over. However, the majority don't expect to see any significant improvement in trading during the remainder of 2010 while many believe they will undertake further cost cuts including workforce reductions this year according to the findings of the latest South East Business Confidence Study. This is the fifth in a series of twice-yearly surveys conducted in the South-East of Ireland by Kilkenny-based market research firm, Market Dynamics. 326 organisations in the region participated.
The findings demonstrate that about three-quarters of businesses have made price reductions because of the downturn. More importantly, 60% of businesses expect to maintain these prices after the economic recovery. In addition, and a positive indication for many suppliers in these industries, is the fact that many organizations plan to make significant investments in marketing, training and IT.
Commenting on the results, John Gilsenan, Managing Director of Market Dynamics, stated: “while the economic environment in the South-East has not improved to any significant extent in the past six months, businesses have adjusted to this new reality. They have cuts costs and are ready to do so again this year as the need arises. Many have cut prices and most expect that these prices won't rise again when the recovery comes. This is a positive message that businesses are coping well and consumers can benefit. It is good news for the competitiveness of the region and the country. Indications of significant investment in the coming months by many businesses is a positive indication of their increasing confidence in the future."
Other survey findings include the following:
- Despite the improvement in the sales index since the last survey, nonetheless, more businesses expect a fall in sales this year than an increase
- One-third of businesses expect 2010 sales to be better than last year
- There are more job losses to come as a third of businesses expect to have fewer employees at the end of 2010 than they had at the end of 2009
- Nearly half of all businesses surveyed (46%) will be cutting costs further in 2010 - a further 28% are unsure whether they will have to or not
- Just 18% have already seen an upturn in their business - 53% expect it will be 2011 before they see an improvement
- When asked what economic recovery is primarily dependent on, 42% cited an improvement in consumer confidence while 26% believe it is credit availability and 23% global recovery
- 44% of people are more positive about the prospects for their business than they were six months ago while 40% feel the same as before. Just 16% are more negative
- A total of 42% of businesses have reduced prices by 10% of more on average and 60% of businesses expect to maintain current price reductions after the recovery arrives
- Over half of respondents (56%) believe the departure of Martin Cullen from the government will have little or no impact on the economic future of the South East region - just 15% across the region think it will have a significant impact, though 37% of Waterford-based businesses do so.
- In preparation for the upturn, 45% of businesses plan to make a significant investment in advertising / marketing in the next six months, while 24% will invest in training and 17% in IT
County by County Summary
- Carlow businesses are the most negative about sales with nearly half expecting a fall in turnover this year. However, regarding cost cutting and workforce numbers they are among the most positive and 26% have already seen an upturn in business
- Kilkenny businesses are the most positive about sales this year with 39% expecting an increase over 2009. However, it has the lowest proportion of respondents who are more positive about things than 6 months ago. Here, too, 26% have already seen an upturn in business
- South Tipperary businesses are the most positive in their expectations for an upturn in business in the current year (41%). This is very dependent on the second half of the year, however, as just 10% have seen an improvement already.
- Waterford has the highest proportion of businesses (53%) that expect to engage in further cost reductions in the current year. However, it also has the highest proportion of businesses (34%) that have made no significant price reductions
- Wexford has the highest proportion of businesses who believe the upturn won't come until 2011. It also has the highest proportion of businesses that plan significant investment in advertising and marketing in the next 6 months.
Market Dynamics is an independent market research company based in Inistioge, Co. Kilkenny. For further information on the South East Business Confidence Study and its findings please contact Fiona Macrae on 056 775 8844 or e-mail
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For further information on Market Dynamics, please visit our web site www.marketdynamics.ie. |
