Small Business Optimism Drops While It Grows With Large Businesses

The business mood index has grown. ISET establishes business mood index together with BIA and ICC Georgia. In Q1 of current year, this index improved by 3,2 points and reached 31,4 points.

60% of the respondents of the survey expects improvement of operation of their own business within next three months.

Present situation index, which shows the state of business in the last three months, dropped in Q1 2018 (-15,6 points). Compared to other sectors, construction sector has made the worst assessment of its performance, which may be due to seasonality of the sector.

Business optimism has grown compared to Q4 2017 (+15,5) and to Q1 2017 (+17,9) and has reached 48,9 points. Construction and services sectors have most significantly contributed to improvement of business optimism.

The selling price expectation index has dropped; however, it is still higher than last year. Businesses operating in the field of trade are expecting the biggest price drop in the next quarter, while the biggest increase of prices is expected in services sector. 

Compared to larger businesses, small and medium businesses are characterized by lower optimism rate and weaker present situation. As a result, business mood index for SMEs has dropped by 4,5 points.

With no regard to the size, majority of surveyed businesses still name lack of demand and lack of access to financing as one of the most important limiting factors for their operation.

By sectors, business mood index has changed as follows:

Manufacturing – dropped by 1,5 points; construction sector – improved by 10,1 points; retail trade – dropped by 2,5 points; services – improved by 2,5 points; agriculture – improved by 19,9 poibts; financial sector – dropped by 13,9 points.

69% of the surveyed companies state that within the last three month, number of people employed in their companies has not changed, 23% state that this number has increased and 8% claim that it reduced.

For 41% of the companies, business activeness has not changed during the last three months, while for 14% it has reduced.

As to the future plans, expectations of the financial sector have diminished most of all – by 14,6 points. Expectation index also dropped for construction sector by the same 14,6 points.

Consequently, majority of the surveyed businesses do not expect increase of number of employees during the next three months, besides, 7% of the companies state that reduction of their staff is expected.

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