Continuing Decline In Global Economic Confidence
The confidence of business executives around the world is in decline, with European respondents of The McKinsey Global Survey of Business Executives July 2005 revealing that those who think that Europe’s economy has become worse greatly outnumber those who think it has improved.
However, European executives are shown to be more optimistic about the future of their individual industries than of their national economies.
The survey also revealed that executives confidence in the developing world fell even further, with respondents in China and India claiming to be less confident in the market than they were three months ago.
Executives in IT and telecommunications remain the most confident about the future, despite being far less so compared to a year ago, since the two industries have continued to consolidate and face new sources of competition.
When questioned about hiring, executives were less bullish than they were a year ago, with 34% of the survey respondents saying they planned to increase the workforce over the following six months, compared to 43% in May 2004.
Meanwhile, 19% are saying that they will decrease the workforce over the next six months, though only 12% had such plans in 2004.
IT and telecom executives are both more likely than others to increase the size of their workforce during the next six months, as well as claiming they may decrease it, thus signalling a volatile workplace.
A year ago, just 13% of the IT and telecom executives were planning to shrink the workforce, compared to 24% now considering downsizing. This is attributed to the competitive intensity and general volatility of these two industries and the fact that executives from the sector are the least inclined of all the respondents to say that their companies match talent to opportunities effectively.
Globally, the IT and telecoms industries remain the strongest sectors in terms of economic growth, continuing the trend stated by The McKinsey Quarterly in April (see Global Economic Confidence Falling).
This lack of economic confidence is reflected in the advertising industry, with the latest IPA Bellwether survey showing a downward revision to current marketing budgets in the UK, the first budget cut recorded for nearly two years (see Q2 2005 Bellwether: Growing Concern Over Economy Leads To Budget Cuts.
The trimming of marketing budgets echoes weaker than expected sales and profits as well as growing concern over the economic outlook both at home and abroad.
The latest Marketing Trends Survey from the Chartered Institute of Marketing (CIM) mirrors this gloomy outlook for the industry, with marketers significantly less likely to believe that they can achieve their sales plans than they were this time a year ago (see Gloomy Outlook For Marketers).
Of the 14 industrial and commercial sectors covered by the survey, at least half of respondents describe their current year’s sales plan as ‘very challenging’ or ‘unrealistic’. In the retail sector, nearly two thirds of respondents see their plans as ‘very challenging’.
