Wouldn’t it be great if you had a crystal ball which allowed you to look into the future of your business? Prepare for any mishaps and adjust your plans according?
Unfortunately, we haven’t got one of those. But IHS Markit’s Global Business Outlook Survey is a pretty close second. The survey pulls together the predictions of 12,000 manufacturing and service sector companies across the globe to create this ‘crystal ball’ like report on the year ahead. Here are a few predictions we think every business needs to read…
39% of UK companies expect a rise in business activity
Although, the UK’s optimism has dropped a little since February when companies predicted a 41% rise in activity, Britain is still quietly confident in comparison to the rest of the world where just 31% of businesses expect to see a rise.
European firms are less confident about business growth (just 33% expect a rise), most notably because of concerns around trade relationships and uncertain tariffs.
Whether companies see Brexit as positive or negative, it remains the main source of focus when it comes to predictions for the future. Many firms continue to assert their concern over the uncertainty while others expect a smooth transition with an optimistic outcome further down the line.
Given the growth predictions above, it’s unsurprising that businesses are hesitant to invest in their workforce.
10% of UK businesses expect to boost capital spending, which is significantly lower than our most recent peak of 23% in early 2014.
It seems that the manufacturing sector is expecting to take the biggest drop when it comes to employment, with only 26% of companies predicting an employment boost, down from 36% back in February. Again, it’s Brexit having the most impact on these numbers, as manufacturers fear that the path to Brexit and global trade tensions are a cause for concern when it comes to hiring staff.
Interestingly, this plummet isn’t carried through when it comes to recruitment within the service sector as 23% of service providers expect to see employment levels boosted (up from 21% in February). This is possibly due to the fact the sector is slightly less affected by new trade discussions. Growing your team won’t come cheap though, 59% of service sector companies are also predicting higher staff salaries.
Founder at Frazer John Recruitment, John Dyson comments,
“With mixed sentiment in the market, it’s more important than ever that companies build the right teams with the right people. Recruitment can be expensive, but only if the new hires don’t stay or the interim project support is badly utilised. If companies partner with firms, invest time and don’t make decisions based on cost alone the likelihood is you will attract and retain the right people. This in itself will give your business the stability and optimism to grow, plus it’ll save you a fortune in the long run.”
Despite the pessimistic outlook on business activity and the increase in staff costs, 24% of UK private sector firms still anticipate improvements on last year’s profits.
The survey includes people from lots of different sectors, all of which can see different opportunities amongst the doubt of Brexit, including:
“Weak pound forcing more people to holiday in the UK and not going abroad.”
“More companies having to turn to head hunting to find key members of staff for their business.”
“We are making significant efforts to open new markets outside the eurozone.”
The global outlook is looking a little bleaker overall, with only 19% of Chinese firms and 20% of Indian firms expecting to see a rise in business activity. These figures reflect the biggest global slip in optimism for a year, and inflation expectations revised slightly lower.
But it’s not all doom and gloom, Ireland, Japan and Russia have all seen a rise in their business optimism for the next 12 months.
Want to know more? Download the full report to learn more about the UK Business Outlook over the next 12 months.
For help recruiting the right people for your business, get in touch.
*All facts and figures have been taken from the IHS Markit UK Business Outlook Report, Summer 2018