As in the previous quarter, the SME barometer has fallen and presently lies well below the longtime average. Large companies are still doing better than small and medium-sized enterprises. In the case of architecture and engineering firms, orders in recent months rose further, resulting in very good figures. Tourism is also recovering gradually.
Zurich/Basel, 06 March 2013 - The SME barometer, calculated on the basis of the KOF survey of industrial companies, still shows a grim situation for small and medium-sized enterprises (SMEs). The value for SMEs has deteriorated since July 2012 and is now, at -1.1, significantly lower than the longtime average of 0.3 points. Large companies on the other hand, exhibit a slight rise, which almost offsets the decline at the end of last year. But also the index for large companies is below its longtime average of 0.2 points.
Business conditions in the industry eased slightly in recent months with the exception of incoming orders, and SMEs have caught up with big companies to some degree. But the general situation remains difficult for all industrial companies, and all indicators have deteriorated in recent months. An exception is the business situation of large companies, which improved slightly for most companies in January for the first time since April 2012.
Construction industry benefits from rising demand among architecture and engineering firms
The construction industry continues to benefit from low interest rates and continuing population growth. Nevertheless, SMEs and large companies are drifting apart with the exception of employment levels where differences have diminished. SMEs are doing better when it comes to expected selling prices as well as with regard to employment. However, these figures cannot mask the weakening order backlog and poorer earnings situation for SMEs. Architecture and engineering firms, which are seen as a leading indicator for the construction industry, show no sign of such weakness. Irrespective of size, they still report an increase in demand, which is why they rate their business situation as outstanding.
Also in services, large companies generally outstrip SMEs. But unlike industrials, general business conditions are much better. The situation in the service sector has been improving for a long time, regardless of company size. The only exception is the retail sector, which has long suffered from falling revenues due to falling prices and fixed costs which squeeze margins. The pressure on margins is probably the reason why large companies still judge the economic situation as poor. A downward trend in the retail sector has also been apparent for a number of months in the case of SMEs, although most of them still rate their economic situation as good.
Tourism is gradually recovering from the crisis
Tourism has suffered heavily from the strong franc and falling demand, especially in the European area. But conditions now seem to be brightening somewhat. In the current quarter, revenue is improving for both large companies and SMEs, although the large companies are doing better here as well. Also other indicators show a better situation for tourism. As the level of employment tends to be a lagging economic indicator and the improvement has so far taken place on a low level, it is hardly surprising that headcounts are still considered to be too high.
UBS SME barometer
Industry
Service sector
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Contact
Caesar Lack, UBS CIO Wealth Management Research
Tel. +41 44 234 44 13, caesar.lack@ubs.com
Sibille Duss, UBS CIO Wealth Management Research
Tel. +41 44 235 69 54, sibille.duss@ubs.com
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