Alessandro Dragonetti
03 Jan 2018
Data of the latest Grant Thornton International Business Report (IBR) reveal that despite the rise of automation, record global business optimism (net 58%) will see businesses turn to people in 2018 to meet swelling order books, according to new global survey data from Grant Thornton’s International Business Report (IBR). Plans to hire more workers are at their highest level in a decade. However, Grant Thornton warns that, with economic indicators pointing to a potential peak in the business cycle, companies need to balance their investment decisions and take steps to boost productivity.
What stands out is the dramatic nature of the rise in businesses planning to employ more workers – up 11pp on a year ago – to net 40%. Every region, globally, has reported a year-on-year increase in employment expectations.
The desire to expand workforces comes amid healthy levels of demand, as the proportion of firms concerned about a shortage of orders falls to net 23% globally – the lowest figure recorded in a decade of IBR research. Firms are feeling confident enough to raise prices, with net 36% of firms planning to do so over the next 12 months, while net 50% of firms expect higher profits compared to net 41% a year ago.
The IBR also finds that businesses are continuing to boost their investment in plant and machinery in 2018, with net 36% saying this is the case - a rise of 3pp from a year ago. However, this relatively flat pace of growth contrasts with the figures for employment. In the US, net 49% of firms plan to expand their workforce, compared to net 39% who will spend more on plant and machinery. Meanwhile, increased investment in technology has eased during Q4 to net 44% from net 47% in Q3 2017.
Alessandro Dragonetti, Co-managing partner and Head of Tax at Bernoni Grant Thornton, commented:
“Italian businesses are suffering due to the high political uncertainty deriving from forthcoming elections that will take place next 4 March and that will unlikely lead to the election of a majority in Parliament able to represent a strong Government. The Industry 4.0 plan seems to have exhausted its positive effects on investment in technology. However, innovation and technology can still be the pillars of the Italian economic relaunch, but only together with an appropriate training and development of talents and excellence and a scientific approach to business organization.
“What can businesses at a global level do to get the most from the present environment in order to make the favourable period does not finish with the end of next year? A higher balance in investment is crucial. Hiring more employees brings many benefits, but if investment in technology, plant and machinery does not grow accordingly, employees will be less and less efficient and revenue will start decreasing steadily.