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Companies expect sales and employment to suffer at the beginning of 2023

Date: June 10, 2023 Time: 12:49:07

Sales and employment will suffer in the first quarter of 2023, coinciding with the slowdown that the Spanish and European economies have already begun and that will continue in the coming months, as announced by international organizations such as the International Monetary Fund, in addition, the European Central Bank and the Government itself. Companies anticipate a “less favorable” behavior of these two variables due to the containment of demand. This will mean, among other things, that employment may evolve downward for the first time since the beginning of 2021.

This is one of the main conclusions of the Bank of Spain Survey on Business Activity for the fourth quarter. According to the publication, around half of the companies have already recovered the billing levels prior to the pandemic. Among those that have not achieved it, almost a third hope to return to the rhythms of then from next year or later. Meanwhile, 20% say that uncertainty does not allow them to specify the date on which they will achieve that comeback.

The report that analyzes the survey, signed by Mario Izquierdo, from the General Directorate of Economy and Statistics, points out that companies perceive “a certain relief” from inflationary tensions, which, however, will continue to be high between January and March. Prices have moderated in Spain to 6.8% in November from the historical peak that they reached in July at 10.8%. “There has been a certain containment in the prices of intermediate consumption in the fourth over the third, which would have repercussions in slightly smaller increases in the sale price of their products,” he adds.

The current and expected increases for sales prices continue to be lower than those registered in the cost of intermediate consumption, which, according to the report, would continue to suggest a compression of business margins. From the data provided by almost 5,600 non-financial companies, the body led by Pablo Hernández De Cos concludes that these are experiencing “precedent practice” of their increase between October and December, after the decline in the third quarter. At the same time, its calculations for the first quarter of 2023 are less favorable given that a contraction in sales is expected.

Labor shortages affect 34% of companies

In terms of employment, in this fourth quarter there has been, as in the previous one, a setback that, if confirmed, would be the first since the beginning of 2021. In any case, as in previous editions of the survey, the better relative evolution of employment compared to turnover if the start of the Covid crisis is taken as a reference. 34% indicate that the labor shortage is negatively worsening their activity, somewhat above last quarter, with greater difficulties in the hospitality industry, where 62% say they have problems, and, to a lesser extent, in construction ( 49%

By sectors, the “very favorable” behavior of information and communication services stands out, as well as the recovery of construction, where sales had shown greater weakness in previous quarters. At the opposite extreme, the worst evolution of billing is observed in agriculture -already negative in the third quarter- and in hospitality, which between April and September had improved sales.

Fewer problems in supply chains

In commerce and industry, business activity has maintained the negative tone of the previous quarter. The consulted companies also indicated, in 17.7% of the cases, they will discount the investment in this last quarter compared to 12.4% in the third, concentrated above all in larger companies.

Finally, the bottleneck and broken supply chain issues that have plagued many companies since the pandemic have shown some decline in the fourth quarter, with more than half of those surveyed (57%) expecting these to subside. solve before the middle of the next exercise. 80% indicate that the main effect of the war in Ukraine is the increase in energy costs and 70% affirm that they are affected by increases in other costs.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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