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Electrical contractors pessimistic on turnovers

Electrical contractors are predicting a dip in business next year as the first quarter of 2010 saw fewer firms reporting turnover increases compared with the end of last year.

According to the Electrical Contractors’ Association’s quarterly business trends survey, fewer businesses reported a boost to business than in fourth quarter of last year, while more reported a drop.

However, the figures are still higher than the first three-quarters of last year. Thirty-six per cent of businesses said there was no change in the level of turnover.

In the first quarter of this year 44 per cent of firms reported a drop in turnover, a slight dip on the previous quarter’s 42 per cent. The proportion of businesses reporting an increase in turnover fell back slightly to 20 per cent.

The South-east was the only region to escape a fall in turnover, with the North and West suffering the largest dip.

The improvement in the South-east was significant, with the balance of business reporting a fall in turnover moving from -27 per cent to -11 per cent. In the North, despite an improvement over the second half of last year, the balance fell back to -36 per cent in the first quarter of 2010.

Large businesses with a turnover of more than £5 million continue to outperform smaller ones, with a positive balance of 8 per cent.
Medium-sized businesses with a turnover between £200,000 and £1 million had the most positive outlook for the second quarter of this year compared with the previous survey, although the balance is still down at -13 per cent.

Nationally, the number of businesses reporting a fall in the level of enquiries has fallen back to -11 per cent, after steadily improving over the final three quarters of 2009.

However, January’s optimism about the next 12 months has fallen away as hopes of a recovery fade.

Almost 80 per cent of businesses surveyed believe turnover will decrease or fail to grow over the next 12 months.

Forty-two per cent of businesses surveyed said they expected a further fall in turnover in the next year, while 36 per cent expected the level of business to remain unchanged, with only 21 per cent expecting any growth.

The survey says that the pessimism that grew at the beginning of 2008 eased in the following 12 months but has returned this year.

Small businesses with a turnover of up to £200,000 were the most concerned about a downturn in business, along with firms in Greater London.

Overall, businesses cited high levels of competition, the price of raw materials and tight margins for increasing concerns about the next year.