Revenues Rising but Slowdown in Pace of Growth

May 5, 2010
New survey says full recovery won't happen until December of 2010.

A higher percentage of businesses reported seeing revenue and profit growth than were experiencing decline, according to the bi-annual Regus BusinessTracker survey. However, respondents, who were asked "When do you expect economic recovery and growth to be advancing strongly and reliably in your country?" have now shifted their expectation of the full momentum of economic recovery back five months, from July to December.

In the U.S. specifically, net growth companies are modestly positive at +3% (compared to -4% in August), but recovery expectations have shifted from August 2010 to January 2011.

The study revealed net growth, with 12% more firms reporting a rise in revenues rather than a decline, and 8% more companies experiencing an increase in profits rather than a reduction.

The second edition of the Regus BusinessTracker international economic indicator survey canvassed 15,000 businesses in more than 75 countries about their financial performance and expectations for growth.

The survey also analyzed the effects of company size on economic expectations and stimuli. In the U.S., fewer small companies have experienced revenue and profit growth compared to larger firms. When asked about the measures they believed would be most effective in aiding the recovery, 68% of small companies (58% globally) advocated keeping interests rates low for another year, indicating that small businesses are willing to invest as long as the conditions are favorable.

Larger businesses also manifested an above average concern with interest rates remaining low (67%). Similarly 13% more large businesses than the global average (46%) emphasized the importance of additional tax breaks to consumers. With U.S. household consumption expected to decline further in 2010, it is not surprising that businesses are concerned that consumers should be stimulated to purchase.

The survey also analyzed sector differences, finding that the decline in revenues in the American manufacturing sector was 16% more significant than the global average. IT companies have experienced an 8% above the global average rise in revenues. The sector is well placed to be more bullish in their predictions for the coming year, with 13% more companies than the global average (70%) expecting their revenues to rise in the coming year.

"Despite the slippage between expectations and real experience of business growth observed in this latest survey, it is important to emphasize that the experience of growth is overall still positive with large companies in the U.S. requiring some stimulus from institutions to avoid a further contraction of household consumption," said Mark Dixon, CEO of Regus.

Dixon continued, "an important caveat remains, however; commentators everywhere agree that businesses must take some important lessons away from the downturn. In particular the restructuring of workforces and workplaces should become a continuing process as the flexible working practices which helped weather the recession have yielded a number of positives for employers and employees alike. Anecdotal evidence gathered by Regus from its operations globally indicated that the shift from traditional commercial property leasing to solutions that accommodate more flexible working systems is certainly underway and likely to play a large part in the coming recovery."

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