The pick-up in global confidence has not so far been matched by an improvement in the capital expenditure and employment indices, which have remained downbeat. Half of firms are still either cutting or freezing employment, while only 13% are increasing investment in staff.

Firms scale back capital projects

Only 16% of businesses reported that they are increasing investment in capital projects, compared with 41% that said they are reducing investment. In every region there are far more firms scaling back investment than increasing it, but the gap was smallest in the US and Western Europe.

Different investment intentions

There was also a notable difference between the investment intentions of SMEs, 38% of which said they are scaling back investment, compared with 43% reported by large firms. Large firms tend to rely more on overseas demand than SMEs, and are therefore likely to have been hit harder by the downturn in global trade.

Comparison bar charts showing differences in scaling back investment in capital projects versus increasing investment in capital projects. Data which follows are approximate, see report for actual figures. Scaling back: Africa 67%, Caribbean 65%, Asia Pacific 58%, Central & Eastern Europe 58%, total 41%, Middle East 40%, South Asia 38%, North America 36%, Western Europe 34% Increasing investment in capital projects: Africa 11%, Caribbean 20%, Asia Pacific 17%, Central & Eastern Europe 15%, total 15%, Middle East 13%, South Asia 12%, North America 20%, Western Europe 16%

Firms to explore cost cutting

Despite 39% of businesses saying that rising costs were a problem in Q2, 49% of firms said that they saw an opportunity to explore cutting costs. This is not surprising, after all, the latest recovery in commodity prices has still left them well below the highs of a couple of years ago, and the global inflationary environment remains very weak.