Docstoc

Travelex Confidence Index report

Document Sample
Travelex Confidence Index report Powered By Docstoc
					                                                                                       January 2011
                                                                                          Powered by TnS research
                                                                www.travelexbusiness.com/uk/confidence-index




Importers’ confidence slumps in January

Trade confidence remains at 106
                                                                 David Sear, Global Managing Director at
in January after importers make a
                                                                 Travelex Global Business Payments, said:
shaky start to the year
• Fall in importers’ confidence driven by lingering              “UK	GDP	figures	in	the	fourth	quarter	of	2010	
  concerns over economy                                          were	undoubtedly	disappointing.	Even	with	the	
•	 	 luggish	domestic	demand	may	be	affecting	importers’	
   S                                                             wintry	weather	factored	in,	the	news	came	as	
   trade and confidence levels                                   a	major	shock.	However,	it	doesn’t	seem	like	
                                                                 British	exporters	are	worrying	about	much	at	
   I
•	 	mporters	continue	to	show	lack	of	confidence	in	future	
                                                                 the	moment,	apart	from	the	performance	of	
   trade conditions
                                                                 their	own	business.	Their	recovery	is	well	on	
                                                                 track,	bolstered	by	the	resurgence	of	exports	
Exporters’ expectations dip slightly                             and	the	renewed	political	push	for	an	export	
                                                                 led	recovery.	In	terms	of	growth	figures	for	the	
but overall confidence shows no
                                                                 first	quarter	of	2011,	exporters’	resilience	is	
signs of abating
                                                                 extremely	encouraging.”
   M
•	 	 ajority	of	exporters	display	a	positive	attitude	about	
   the	UK	economy
                                                                Travelex forecast for December UK Trade Deficit
   C
•	 	 onfidence	riding	on	the	back	of	a	resurgence	of	export	
   activity	in	manufacturing	sector                             Narrow less than £8.7 billion                 30%
   S
•	 	 light	dip	in	number	of	exporters	who	forecast	growth	in	
                                                                Widen more than £8.7 billion                  50%
   their	export	activity
                                                                Unsure                                        20%

Travelex Confidence Index,
January 2011
Trade Confidence remained stable at 106 during January

                                   106




0                                                        200




Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
                 Emma Kane, 020 7566 6700, ek@redleafpr.com
                                                                                               January 2011
                                                                                                 Powered by TnS research
                                                                   www.travelexbusiness.com/uk/confidence-index




Travelex Confidence Index summary

The	British	Trade	community	started	the	year	in	a	mire	                                             Oct    Nov    Dec Jan
of	uncertainty,	as	importers’	confidence	dwindled	whilst	
exporters	remained	defiant.	Whilst	the	overall	Confidence	
Index	was	stable	at	106,	confidence	in	the	International	           Confidence Index (TCI)          104    112    106 106
Trade	Index	and	Current	Situation	Index	dropped	three	
points	to	103,	driven	by	negative	attitudes	to	current	and	         Current	Situation	Index	         100	 110	    106	 103
future	economic	conditions.	
                                                                    International	Trade	Index	       100	 113	    106	 103
Importers fear economic climate whilst exporters                    Expectations	Index	              101	 104	 100	 100
remain positive
British	importers	continued	to	express	a	large	degree	
of	pessimism	towards	the	UK	economy	in	January,	with	              who	were	unsure	of	an	export-led	recovery	increased	to	
only	40%	showing	confidence	in	the	current	economic	               22%,	the	highest	in	10	months.	This	demonstrates	that	
climate,	a	19%	fall	from	December.	Their	pessimism	forced	         despite	the	current	buoyancy	of	Britain’s	export	market,	
trade	confidence	in	the	UK	economy	to	a	two	month	low.	            businesses	remain	uncertain	of	the	impact	a	weak	pound	
A	key	contributing	factor	is	likely	to	have	been	continued	        has	on	Britain’s	exports	and	understand	that	export	
economic	uncertainty	over	the	looming	government	                  conditions	are	extremely	volatile.
spending	cuts,	as	well	as	rising	inflation,	which	is	helping	to	
push	consumer	prices	up.	
                                                                   Tighter credit controls hampers business
In	contrast,	exporters’	attitudes	towards	the	economy	             confidence
remained	fairly	buoyant,	with	67%	expressing	confidence	           Tighter	credit	conditions	hampered	importer	and	exporter	
in	current	conditions.	This	is	consistent	with	last	month’s	       confidence	in	January,	as	businesses	with	less	access	
encouraging	trade	figures,	which	showed	that	excluding	            to	credit	revealed	their	concerns	over	trading	conditions	
oil	and	erratic	items,	the	volume	of	goods	exports	rose	by	        and	the	economy.	Nearly	half	(47%)	of	the	exporters	and	
3.4	per	cent	and	the	volume	of	goods	imports	rose	by	0.3	          importers	interviewed	said	they	thought	it	was	difficult	to	
per	cent,	compared	with	October.	                                  access	credit,	whilst	32%	said	they	hadn’t	tried.	This	in	
                                                                   turn	impacted	on	their	confidence	in	the	economy,	which	
Pre-GDP figures, concerns over double dip                          hit	its	lowest	in	two	months.	
had faded
January’s	report	provides	us	with	an	interesting	                  Expectations for the future
snapshot	into	the	opinions	of	British	exporters	and	               January	saw	the	trade	community	becoming	slightly	less	
importers	before	news	of	the	UK’s	shocking	economic	               confident	about	future	international	trading	conditions,	
contraction	in	the	fourth	quarter	of	2010	was	released.	           the	lowest	since	September.	This	fall	in	confidence	was	
The	Index	clearly	shows	that	before	the	data	release,	             driven	once	again	by	downbeat	importers,	with	only	52%	
businesses	were	fairly	sanguine	about	sustainable	                 expressing	confidence	in	the	future,	compared	to	72%	
economic	growth,	with	61%	confident	that	a	double	dip	             of	exporters.
recession	would	be	avoided.	Importers	were	slightly	
more	confident	in	this	area	than	exporters.	                       Confidence	in	business	prospects	remained	stable	at	
                                                                   62%,	although	this	was	driven	largely	by	an	optimistic	
                                                                   base	of	exporters,	where	over	half	(63%)	expressed	
Confidence in export led recovery is buoyant
                                                                   positivity	about	their	business	trade	over	the	next	6	–	12	
Confidence	in	an	export-led	recovery	was	fairly	buoyant	           months.	Importers,	on	the	other	hand,	expressed	less	
in	January,	remaining	at	the	long-run	average	of	46%.	             confidence,	with	less	than	half	(48%)	showing	confidence	
Interestingly,	the	number	of	importers	and	exporters	              about	business	prospects.




Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
                 Emma Kane, 020 7566 6700, ek@redleafpr.com
                                                                                         January 2011
                                                                                               Powered by TnS research
                                                                   www.travelexbusiness.com/uk/confidence-index




Index at a glance

Travelex Confidence Index (TCI)                                    Confidence Index
Research took place on the 11th – 25th January 2011                114
                                                                   112
                                                                   110
The	Travelex	Confidence	Index	was	stable	at	106	                   108
in	January,	unmoved	from	the	previous	month.                       106
                                                                   104
                                                                   102
Sub-indices
                                                                   100
The	Travelex	Confidence	Index	measures	the	views	and	               98
sentiments	of	the	UK’s	importers	and	exporters	across	              96
                                                                    94
three	sub-indices:	Current	Situation	Index,	International	               Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Trade	Index	and	the	Expectations	Index.

The Current Situation Index                                        Current Situation Index
The	Current	Situation	Index	monitors	importers	and	                115
exporters	views	on	current	government	policies	and	                110
availability	of	business	credit.	This	index	fell	by	3	points	in	
                                                                   105
January,	as	businesses	access	to	credit	hampered	importer	
and	exporter	confidence.	Nearly	half	(47%)	of	the	exporters	       100
and	importers	interviewed	said	they	thought	it	was	difficult	to	
                                                                    95
access	credit,	whilst	32%	said	they	hadn’t	tried.	
                                                                    90
                                                                    85
                                                                         Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan


The International Trade Index                                      International Trade Index
The	International	Trade	Index	measures	importers	                  115
and	exporters	views	on	trading	conditions.	This	Index	
                                                                   110
decreased	by	3	points	in	January.	The	proportion	of	
importers	who	are	confident	about	the	economic	and	                105
trade	conditions	fell	again	in	January,	with	only	40%	
showing	confidence	in	the	current	economic	climate,	a	             100
19%	fall	from	December.	Exporters’	attitudes	towards	the	           95
economy	remained	fairly	buoyant,	with	67%	expressing	
confident	in	current	conditions.	                                   90
                                                                         Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan


The Expectations Index                                             Expectations Index
The	Expectations	Index	measures	importers	and	exporters	           106
views	on	whether	international	trade	conditions	will	improve	      104
over	the	next	6-12	months,	and	whether	their	business	             102
will	see	growth	in	its	international	activity.	Overall,	the	       100
Expectations	Index	remained	stable	at	100	in	January,	              98
although	confidence	in	future	trading	conditions	receded	           96
slightly.	The	proportion	of	importers	and	exporters	who	            94
are	confident	trade	conditions	will	improve	over	the	next	
                                                                    92
12	months	dropped	2%	to	60%.	                                            Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan



Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
                 Emma Kane, 020 7566 6700, ek@redleafpr.com
                                                                                                                                                         January 2011
                                                                                                                                                                Powered by TnS research
                                                                                                             www.travelexbusiness.com/uk/confidence-index




Demographics

Issues affecting growth                                                                                      Overseas customers and suppliers
                                                                                                        80                                                     32
     Overall health of                                                                                  80            Asia                                    29
 the global economy                                                                                    79                                                    28

                                                                                        63                                                                                    75
 Cheaper competitors                                                                         67                     Europe                                                    75
                                                                                                  71                                                                         74

                                                                                   59                         North America                            22
   Reduced budgets                                                                        66
                                                                                                                     (USA)
                                                                                                                                                        24
                                                                                                                                                       22
                                                                                        64

                                                                                               68                                               12
   Currency volatilaty                                                                         68            South America                       13
                                                                                  58                                                    8

International regulation                                          37
                                                                             47                                North Africa
                                                                                                                                                11
                                                                                                                                        7
      and compliance                                                       35                                                               9

                                                                 33                                                                             11
    Credit availability                                                     47                                 South Africa                 8
                                                                       40                                                                       11

          Efficiency of                                          33
                                                                            47                                    Australia
                                                                                                                                                 13
                                                                                                                                                12
international payments                                                38                                                                    9
                                                                                                                                                                                   November
                                                            28                                                                           9
    Political influence                                               38                                      New Zealand               8                                          December
                                                                      38                                                                8
                                                                                                                                                                                   January
      Lack of human                                  22
                                                            31                                                       Other
                                                                                                                                                 13
                                                                                                                                                  14
          resources                                   24                                                                                        12
                                                                                         November
           Balance of                        18
                                                      25                                 December
           trade data                         21
                                                                                         January
              None of       1
                             3
            the above         5



Industry sector                                                                                              Business location
                                                                                                       49                                                                          85
       Manufacturing                                              22
                                                                                             43
                                                                                                                   England                                                              89
                                                                                                                                                                                         91

                                2                                                                                             1
         Construction            3                                                                                   Wales    1
                                         6                                                                                    1

          Fuel, utilities                                                                                                           5
           and mining
                            1
                                             9
                                                                                                                  Scotland        3                                          November
                                                                                                                                   4

                                                                       24
                                                                                                                                                                             December
      Wholesale/retail                                                                                                                          9
                                                                             28                                      Other                  8
               trade                                  12                                                                           5                                         January

           Hotels and       1
           restaurants      1

            Transport/          2
                                     4
               storage                       7

                                2
      Communictions         1
                                    3


           Real estate

             Business           3
                                 4
              services           4


  Health/social work        1
                                    4                                                        November

                            1
                                                                                             December
                            1
                                                                                             January
                                                           15
                  Other                                     16
                                                 8




Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
                 Emma Kane, 020 7566 6700, ek@redleafpr.com
                                                                                        January 2011
                                                                                           Powered by TnS research
                                                                www.travelexbusiness.com/uk/confidence-index



feedback from some of the exporters and
importers interviewed in January
This month we spoke to exporters and
importers about the Government’s Austerity                       ABOUT ThE TrAvElEx CONfIDENCE INDEx
                                                                 (TCI)
plans and asked them what impact it might
have on their business.                                          The	Travelex	Confidence	Index	measures	the	views
                                                                 and	sentiments	of	the	UK’s	importers	and	exporters.
“Spending	cuts	have	to	be	made	and	we	have	to	endure	them.”
                                                                 The	index	is	based	on	the	response	to	three	core	
Importer, England                                                question	areas	–	the	respondents’	appraisal	of	
                                                                 current	international	trade	and	economic	conditions,	
“My	guess	is	that	it	will	affect	business	because	there	will	
                                                                 respondents’ appraisal regarding ability to obtain
be	less	investment.	That’s	going	to	have	a	knock	on	affect	
                                                                 credit	and	the	respondents’	expectations	of	future	
on	us	because	we	primarily	deal	business	to	business	and	
                                                                 international	trade	conditions	over	the	next	6	to	12	
people	invest	by	buying	our	equipment	to	perform	checks	
                                                                 months.	
in	safety.”
Both Importer & Exporter, England                                For	more	information	on	the	TCI	visit	
                                                                 www.travelexbusiness.com/uk/confidence-index
“Our	concern	is	the	impact	it	will	have	on	the	consumer	
market	retail	market.	We	import	lots	of	clothes	so	              ABOUT TrAvElEx GlOBAl BUSINESS
obviously	we	are	dependent	upon	the	retailer.	We	are	            PAyMENTS
very	much	dependent	on	retail	demand	for	import	of	              Travelex	Global	Business	Payments	is	a	global	
products	from	Asia”                                              foreign	exchange	specialist	providing	the	payment	
Both Importer & Exporter, England                                and	receipt	of	domestic	and	international	funds	for	
                                                                 businesses	of	all	sizes.

  Exporter, England                                              For	more	than	30	years,	Travelex	Global	Business	
                                                                 Payments	have	provided	clients	with	sophisticated	
  “VAT	should	have	stayed	at	17.5%	rather	than	                  market	knowledge,	leading	edge	technologies	
  increasing	it	to	20%.	VAT	is	effectively	a	taxation	           and	practical	and	innovative	solutions	tailored	to	
  on	labour	or	on	the	working	man.		The	majority	of	             business	requirements.
  manufacturing	industries	have	a	25%	purchasing	cost	
                                                                 Every	year,	Travelex	Global	Business	Payments	
  on	all	goods	invoice,	therefore	75%	of	the	costs	are	
                                                                 processes	payments	around	the	world	for	over	
  due	to	labour,	which	is	incorporated	in	paying	VAT.”           35,000	businesses.

                                                                 This report has been prepared solely
“In	terms	of	VAT,	I	have	little	concern	where	it	is	             for informational purposes and does not
recoverable.	In	terms	of	our	customers,	we	are	very	lucky	       purport to provide any financial, investment
as	a	lot	of	them	are	VAT	exempt	or	we	are	exporting	so	          or professional advice. Travelex makes no
the	affect	on	our	organisation	will	be	small.	Spending	cuts	     representation, warranty or condition of any
will	impact	us	massively	because	a	large	proportion	of	our	      kind, expressed or implied, in this report.
customers	are	health	providers	which	directly	impacts	
their	ability	to	purchase	diagnostic	media	within	the	
laboratories	and	hospitals.”
Both Importer & Exporter, England

“I	think	that	spending	cuts	will	reduce	the	demand	from	
some	of	our	customers	who	are	either	Government	
departments	or	receive	subsidies	from	the	Government.”
Importer, England



Media enquiries: Jessica Buttress, 020 8415 4204, jessica.buttress@travelex.com
                 Emma Kane, 020 7566 6700, ek@redleafpr.com