ISME report shows uncertainty around Brexit
The results of the ISME Quarterly Business Trends Survey for the first quarter of 2017 show a decline in the exports sector and an overall decline in profitability expectations for the SME sector. However, there are improvements in the overall confidence indicator index with positives in five of 12 areas. The Trends report also looks at pay in the SME sector. As expected, economic uncertainty and Brexit are the biggest concerns for SMEs in 2017.
Commenting on the results, ISME CEO, Neil McDonnell said: “While the improvement in confidence since Q4 2016 is welcome, economic uncertainty and Brexit remain the biggest challenges for SMEs, especially those involved in exports.
“Since our last trends survey report, Article 50 has been triggered. We have seen a drop in current and forecast exports, the latter dropping by 19% on Q4. Profitability expectations have also dropped.
“We have included pay expectations for the SME sector in this trends report. 35% of businesses will not increase pay this year, while 24% will pay an increase of between 0.5% and 2.4%. This contrast with the pay expectations of the public sector unions shows how unrealistic the latter are in their pay demands.”
The survey was conducted in the last week of March, with almost 1,000 SME respondents, 43% of whom employ less than 10; 43% employ between 11 and 49 and the remaining 14% employ between 50 and 250. Geographically, 28% are from Dublin, 58% are spread across the rest of the country and 14% have multiple sites.
There was an improvement in our trends confidence indicators, with five (out of 12) indicators showing positive, compared with eight negatives in Q4’16. Export Expectations experienced the biggest drop, down 19% from 49% in Q4’16 to 30% in Q1 17. Current exports have also declined from 16% to 14%. Profitability expectations dropped from 15% in Q4 16 to 5% in Q1 17.
The latest pay research shows that 55% of SMEs will increase pay of up to 5%, 35% of businesses will not increase pay this year, while 4% of businesses will reduce pay this year. Only 5% of businesses will increase pay by more than 5%.
Brexit and economic uncertainty remain the biggest concern for SMEs in the first half of this quarter. Brexit in Q1 overtakes economic uncertainty as the biggest challenge for SMEs. This increase was expected due to the triggering of Article 50 in March.