New barometer shows small businesses booming

UBS' new tool will track company performance in a sector that is often underestimated. imagepoint

Small and medium-sized enterprises which form the backbone of the Swiss economy are in robust condition, according to a new tool launched to check their health.

Switzerland’s largest bank UBS said the barometer filled a major void in the range of economic policy instruments. The bank joined forces with the Swiss Association of Small and Medium-sized Enterprises to create the new tool.

More than half of SMEs registered higher sales in the third quarter of 2006 and ten per cent raised prices, the barometer shows.

The SME indicator, based on an existing UBS survey that analyses economic performance of manufacturers, includes a representative sample of SMEs, particularly from the service sector, the bank said in a statement.

The director of the SME association, Pierre Triponez, said the organisation “was keen to provide its members with a new barometer that would give a review of how SMEs have been performing as well as an outlook for the future”.

The first of the quarterly reports found that 54 per cent of companies surveyed registered higher sales in the past three months but expected the pace to slacken by the end of the year.

On balance, UBS said, SMEs benefited more than large companies from the economic upswing in the third quarter.

Higher sales volumes and tighter cost controls stimulated further recovery in earnings with 24 per cent of businesses improving their profitability.

Brisk business activity also had a knock-on effect on the employment data: a net 16 per cent of companies had a higher headcount at the end of June in comparison with the previous year, while the figure at the end of September was 25 per cent, a statement said.

It added that the “robust state of the SME sector this year has bolstered investment activity among companies surveyed… investment activity is likely to remain at similar levels in 2007”.

swissinfo with agencies

UBS methodology

The SME barometer is based on an evaluation of the UBS survey on manufacturing that has been carried by the bank since 1975.

Around 700 companies (500 SMEs) are surveyed each quarter. The barometer reports the balances of the current and expected business climate, employment, sales prices and earnings.

These indicators are reported as weighted averages of the performance of each sector.