Optimism among SMEs at highest level in over a year
Optimism within the Irish SME sector is at its highest level for over a year, according to the latest SME Confidence Index from non-bank lender Linked Finance.
Linked Finance noted that larger SMEs, which employ between 10 and 250 workers, are the most upbeat, reporting a positivity rate of more than 72% on the index on their current outlook.
But micro-SMEs (1-3 employees) were the least optimistic, with a score of just over 61%.
Recent CSO figures show that SMEs comprise 99.8% of businesses in Ireland and employ 2.3 million people here.
Today’s index from Linked Finance also reveals that the service sector showed the strongest positivity, at almost 66%, while there was marginally more positivity among Dublin SMEs (65%) compared to similar businesses outside the capital (62%).
Meanwhile, Fine Gael are the preferred party amongst SMEs, especially in Dublin, and have increased their lead (37%) over Fianna Fáil in the second quarter of this year by 17 points in the third quarter.
The latter received 20% as the party of preference, while Sinn Féin are ranked best for business by 11% of respondents . However, 21% opted for “others” outside of the six main political parties.
Linked Finance said that with exploratory government formation talks likely to start soon, SME business owners will be looking to the country’s leaders to ensure they are well supported, given the potential headwinds from across the Atlantic with the election of Donald Trump and the possible impact of new tariffs on international trade and the Irish economy.
Today’s survey shows job creation among SMEs at neutral levels (job creation equalling job losses) compared to last year.
Mid-sized businesses are driving job creation, while micro businesses are employing considerably less people – the lowest level since the height of Covid.
Linked Finance said that most job creation is coming from firms located outside of Dublin.
It noted that stronger job creation outside the capital has been a feature of the SME sector post Covid, with the rise in availability of employers offering hybrid working a likely contributory factor to this.
Three quarters of businesses – both within Dublin, and outside of it – expect employment levels to remain the same year-on-year, while 15% of SMEs outside the capital expect there to be more people employed over the period, compared to only 6% in Dublin.
Today’s survey reveals that the majority of job losses in SMEs continue to come from the retail and wholesale sector, with one-in-six SMEs surveyed reporting that they expect lower employment levels year-on-year.
But SMEs in the services sector reported a much more positive picture, with 21% likely to have more people employed by the end of 2024, compared to 2023.
The survey from the non-bank lender also reveals that micro firms remain under severe strain when it comes to profitability and have yet to return to pre-Covid levels.
But large SME businesses are doing much better compared to this time last year, with 42% reporting higher operational profits year-on-year.
Profitability levels are under slightly more pressure in Dublin, Linked Finance noted.
“Retail and wholesale businesses continue to be under serious profitability strain, but things are improving somewhat, with an 8% drop in those with lower profits year-on-year,” it added.
Niall O’Grady, CEO of Linked Finance, said that businesses based in Dublin in particular are driving most of the positivity, but outside Dublin, businesses are more positive compared to last year.
“It is encouraging to see this uplift in optimism, particularly given the ongoing instability in the geo-political environment, and high costs that SMEs continue to face,” he added.
Article Source – Optimism among SMEs at highest level in over a year – Linked Finance – RTE
