On the mend
Business confidence in economy returning slowly but surely, new survey shows
Barbadian business confidence is showing some signs of improvement but, overall, it remains on the negative side, reflected in an expectation by several companies, for example, that they will have to make staff cuts over the next 12 months.
These findings came out of the Business Outlook 2015 second quarter survey of 251 business executives, conducted by ABELIAN Consulting Services, which is owned by noted economist Ryan Straughn, in association with the Barbados Chamber of Commerce and Industry (BCCI). There were 56 respondents in the first quarter survey.
Conducted last month, the latest survey found that businesses on the island continued to grapple with a tough economic environment which was hampering their performance and represented a major factor contributing to existing confidence levels.
Sixteen per cent of respondents came from the finance sector which includes banking, insurance and financial services. Manufacturing and the legal profession each accounted for 13 per cent while small and medium sized enterprises accounted for about 73 per cent.
About 41 per cent of correspondents said they expected staffing levels to be reduced over the next 12 months. Out of this number, about 15 per cent represented small business, 12 per cent large businesses and 11 per cent micro businesses.
On the other hand, about 17 per cent said they were expecting an increase in employment at their businesses over the next 12 months while 42 per cent said they expected employment levels to remain the same.
With regard to the country’s unemployment rate, more than two-thirds or 63 per cent of respondents believed it would increase in the next 12 months. About 25 per cent said they believed it would remain the same while 12 per cent expected a decrease.
Respondents identified several major constraints on the growth of their operations with about 64 per cent identifying the country’s weak economic performance as the no.1 limitation.
Next was price pressure from customers and competitors, 41 per cent; rising overheads and utility costs, 37 per cent; declining customer base, 33 per cent; problems with government planning regulations, 28 per cent; licensing and regulations 23 per cent; global economic performance, 20 per cent.
Other major constraints included price pressure from suppliers, difficulties obtaining finance, increased competition from low cost imports, reduced demand for exports, rising production costs, declining visitor numbers, unavailability of skilled workers and access to training.
Despite the negative expectation in relation to employment, the majority of executives surveyed said they generally felt more positive about general business conditions in 12 months’ time than in the short term. About 34 per cent said they believed business conditions would improve over the next 12 months compared with the next three months. About 30 per cent believed conditions would deteriorate.
The majority surveyed, 46 per cent, did not expect a change in real business activity within their firms over the next 12 months. On the other hand, 21 per cent expected a decrease and 33 per cent expected an increase.
There was a similar expectation regarding real profit. About 37 per cent expected their firm’s real profit to decrease over the next 12 months, 42 per cent expected it to stay the same, while 21 per cent said they anticipated an increase.
About 37 per cent of respondents indicated that their businesses performed about the same in the last six months, compared with the previous six months, while 23 per cent reported stronger performance and 30 per cent pointed to a “somewhat weaker” performance.
In relation to accessing credit, almost half of the respondents or 44 per cent believed it would get harder to obtain in 12 months’ time, about 42 per cent said they believed access would remain the same while 14 per cent believed it would be easier.
As for the overall business outlook, about 44 per cent said they believed their companies would perform about the same in the next six months, compared with the last six months. Thirty per cent believed their operations would perform “somewhat stronger” and 16 per cent “somewhat weaker”.