The latest BDO Optimism Index released this week shows that the number of mid-to-large companies reporting higher activity levels in the first quarter of 2016 almost doubled as smaller companies stagnated.
The Index tracks business performance and the views of business leaders across Ireland. The Index, based on 6 years of data, also highlights key trends affecting business in Ireland.
The figures show that the number of mid-to-large companies reporting higher activity levels in the first quarter of 2016 almost doubled as smaller companies stagnated.
The number of micro companies reporting higher levels of business activity fell by one percent, the first decrease since 2012. Activity levels for transitional companies rose just 1%. The divergence between larger and smaller companies can be partly explained by access to funding.
Furthermore, some 69% of larger businesses forecast increased activity in the second quarter of 2016 compared to 48% who said the same thing last year.
However, again, micro and smaller businesses were far less optimistic, as the number of companies predicting an increase in activity fell by 1% on both counts.
The level of exporters reporting increased business activity in the first quarter fell by the most since 2011. Some 47% of exporters said they had higher activity levels in the period, compared to 55% who said the same thing last year. That’s the biggest yearly drop since 2011.
The level of companies who said operating profit fell in the first quarter was 18%, the lowest level since the survey began. Some 36% of Dublin companies reported a rise in operating profit, while 37 percent of companies outside the capital said the same thing. This points to the recovery taking hold, with the regions now experiencing more of the recovery.
Overall 1 in 5 businesses were successful in pushing through price increases compared to the same period last year. Just 7% of companies said they cut prices this quarter, the lowest level since the survey began, indicating a stabilization in pricing policy across sectors and by company size. Seventy per cent said prices were unchanged, signaling most companies are relying on incremental growth on capital employed.
Overall optimism continues to improve, rising to 66.7, a 5% increase over the past year. While general optimism has increased the growth has begun to slow from 21% over the past three years to just 5% for the year.
Managing Partner of BDO Ireland, Michael Costello commented, "The latest BDO Optimism Index shows that while businesses are still growing, the expansion is now clearly being led by larger companies."
He added, "The index shows that currently, mid-sized and larger businesses are pulling away from smaller businesses in terms of anticipated growth and activity. The divergence between the larger and smaller business can be partly explained by funding for SMEs being harder to access and the increased exposure to personal financial issues."
Source: www.businessworld.ie
