New research shows Midlands businesses are showing signs of “rekindled confidence” in their prospects for the rest of the year – even though they accept profits could still fall.
A study of 500 Midlands companies by Lloyds TSB Commercial showed increasing hopes of better sales and orders by the end of 2009, but many feared that profits would remain under pressure and could fall.
The survey’s business confidence index, which tracks firms’ expectations for sales orders and profits over the coming six months, has risen to a balance of -10 per cent – compared to a record low of -31 per cent, six months ago. The balance of firms expecting an upturn in sales has risen to -9 per cent, with 30 per cent anticipating a rise and 39 per cent braced for a fall, compared to a balance of -26 per cent in the last survey.
Researchers also found evidence companies were expecting trade to increase, as 27 per cent of respondents expected orders to climb and 27 per cent predicted a fall – a balance of naught per cent compared to -23 per cent in the last report.
Despite the fresh hopes for sales and orders, profits are likely to remain under real pressure for most local firms.
Although the balance of firms expecting rising profits has improved, from the low of -44 per cent in the last survey, it is still firmly in negative territory at -22 per cent.
A total of 22 per cent expect profits to climb, while 44 per cent believe they will tumble and 32 per cent think profits will remain stable.
A third of Midlands companies reported cash-flow problems – with late payments by customers and weak demand remaining the main causes.
Twelve per cent of businesses surveyed said they expected to increase investment over the next six months while 35 per cent admitted they were likely to need to make cuts.
Researchers also found that 11 per cent of firms were planning to recruit during the last six months of 2009, while 24 per cent planned to reduce numbers, a slight improvement on the last survey.