PressRelease
Forimmediate release
Monday 14 April 2003
IoDreports slump in business optimism
New figures released today shows business optimism hasslumped and company performance has weakened significantly. The downbeat assessment comes from thelatest Institute of Directors' Business Opinion Survey covering the firstquarter of 2003.
The survey shows profits have deteriorated for UKbusinesses, and order books and investment intentions have crashed. Employmentgrowth and output growth are also considerably weaker.
The retrenchment in business activity that began in themiddle of last year accelerated drastically in the first quarter of this year,the survey revealed.
Ruth Lea, Head of thePolicy Unit at the IoD, said:
"Marchsbusiness opinion survey was far worse than we expected and well down on any ofour recent surveys. All the major indicators of economic and business activitydeteriorated. Several indicators, including optimism, orders and investmentintentions, slumped. And this was especially true in the manufacturing sector.
"The survey wasconducted during the early stages of the conflict with Iraq and it is very hardto judge just how much this affected sentiment. But, Iraq apart, the resultsare so bad that they do not suggest a rapid return to strong growth. There aresimply too many negative factors around. One is the weak global economy. The USeconomy remains seriously unbalanced, but through sheer drive will recover.This cannot be said about Germanys weakness. Meanwhile, domestically, theGovernment persists in hampering business with more taxes and more red tape.
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The balance ofcompanies that were more, rather than less, optimistic about their companysprospects - relative to the previous quarter - in March was
6% compared with 15%in December and 40% in March 2002. Company performance was also well down andhas been sliding since mid-2001. Even though the majority of respondentsreported that their companies were still performing well, the balance of thosecompanies performing well, minus those performing badly, was only 53% in March2003, compared with 60% in December 2002 and 80% in June 2001.
The results oncapacity utilisation, order books, employment growth, output growth, profitsand investment were all significantly weaker. There was not one indicator oneconomic and business activity that was not worse than in December. Themanufacturing sector returned particularly worrying responses.
Price pressuresremained weak, with many more respondents reporting increased costs (a balanceof 31%) than increased prices (a balance of -3%); putting a squeeze on margins.Average pay settlements were around 3.2% in March compared with 4.3% inDecember.
Ends 14.4.03 No.164
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Note to Editors
1. The main results of the Business Opinion Surveys since 2000Q1 are attached. For a full copy of the latest Survey contact the Press Officeon 020 7451 3264.
2. The IoD (Institute of Directors) is a non-party politicalindependent organisation with around 55,000 members. In addition to its widerange of business services, the IoD provides an effective voice to representthe interests of its members to government and key opinion-formers. It alsobrings he experience of business leaders to bear on the conduct of publicaffairs.
Contact Points:
Ruth Lea, Head of thePolicy Unit, tel: 020 7451 3291
Graeme Leach, ChiefEconomist, tel: 020 7451 3366
Richard Taylor, PressOfficer, tel: 020 7451 3264
mobile and out of hours: 07721 734886
David Marshall,Director of Public Affairs, tel: 020 7451 3263
mobile and outof hours: 0776 4883420
email: press@iod.com
web: www.iod.com
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Themain results of Business Opinion Surveys since 2000 first quarter are shown inthe table below (all the data related to balances expect for pay settlementswhich relate to an average):
|
|
00 Q3 |
00 Q4 |
01 Q1
|
01 Q2 |
01 Q3 |
01 Q4 |
02 Q1 |
02 Q2 |
02 Q3 |
02 Q4 |
03 Q1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company performance |
76 |
75 |
78 |
80 |
76 |
72 |
67 |
61 |
62 |
60 |
53 |
|
- of which manufacturing |
70 |
59 |
72 |
72 |
76 |
63 |
58 |
51 |
58 |
58 |
57 |
|
Optimism |
39 |
35 |
28 |
28 |
23 |
10 |
40 |
23 |
27 |
15 |
-6 |
|
- of which manufacturing |
38 |
22 |
3 |
19 |
16 |
12 |
32 |
12 |
28 |
22 |
-25 |
|
Capacity utilisation |
-8 |
-6 |
-13 |
-22 |
-7 |
-21 |
-29 |
-25 |
-21 |
-18 |
-27 |
|
- of which manufacturing |
-27 |
-31 |
-18 |
-42 |
-4 |
-34 |
-39 |
-39 |
-14 |
-17 |
-37 |
|
Order books (total) |
24 |
27 |
20 |
9 |
11 |
6 |
7 |
-2 |
-6 |
2 |
-18 |
|
- of which manufacturing |
22 |
20 |
16 |
-10 |
6 |
-1 |
-4 |
-1 |
-7 |
1 |
-21 |
|
Export order books |
2 |
0 |
7 |
0 |
-1 |
-17 |
4 |
-2 |
10 |
-2 |
-4 |
|
- of which manufacturing |
5 |
-11 |
6 |
-20 |
-21 |
-26 |
3 |
-8 |
4 |
2 |
-8 |
|
Employment (reported) |
22 |
25 |
22 |
18 |
28 |
11 |
12 |
13 |
4 |
12 |
1 |
|
- of which manufacturing |
26 |
12 |
5 |
-7 |
18 |
-2 |
-2 |
-3 |
-10 |
14 |
-9 |
|
Output (reported) |
41 |
43 |
40 |
40 |
38 |
33 |
36 |
29 |
24 |
30 |
15 |
|
- of which manufacturing |
39 |
43 |
24 |
25 |
31 |
20 |
28 |
24 |
31 |
41 |
11 |
|
Costs (reported) |
36 |
38 |
35 |
31 |
26 |
14 |
23 |
19 |
19 |
28 |
31 |
|
- of which manufacturing |
35 |
48 |
31 |
18 |
21 |
2 |
26 |
16 |
19 |
27 |
50 |
|
Prices (reported) |
7 |
8 |
9 |
8 |
2 |
-1 |
4 |
-5 |
-1 |
1 |
-3 |
|
- of which manufacturing |
-3 |
-5 |
0 |
-1 |
2 |
-19 |
-5 |
-21 |
-23 |
-3 |
-21 |
|
Profits (reported) |
19 |
18 |
23 |
17 |
21 |
13 |
9 |
9 |
7 |
9 |
-9 |
|
- of which manufacturing |
17 |
6 |
14 |
8 |
19 |
6 |
-8 |
5 |
8 |
15 |
-14 |
|
Pay (%) |
4.1 |
4.6 |
4.1 |
4.1 |
4.3 |
4.6 |
4.0 |
3.6 |
3.9 |
4.3 |
3.2 |
|
Investment outlook* |
Na |
Na |
Na |
Na |
Na |
Na |
Na |
12 |
2 |
-1 |
-28 |
|
- of which manufacturing* |
Na |
Na |
Na |
Na |
Na |
Na |
Na |
7 |
1 |
2 |
-38 |
*aggregate series only available from 2002Q2