Strong Showing for GALA Members in Second Quarter 2011
25 May 2011
The good news reported in the first quarter of this year continued along positive lines in the second quarter. There may have been a slight slowing of growth from the previous three months, but overall, respondents to the quarterly economic survey were encouraged about future growth.
Demand for Services and Products
Demand for services continued an upward trend with a solid 57 percent of respondents reporting an increase in demand over the last three months, up from 51 percent last quarter. Importantly, the number of companies reporting a reduction in demand continued to decline. The number reporting a reduction in demand this quarter was 20 percent, down from 26 percent in the first quarter and the lowest number in the last two years. It also is a significant improvement over this time last year, when 34 percent reported decreased demand, not to mention the lowest point to date – a whopping 78 percent in second quarter 2009.
Responses to the survey question “In the last three months, have you noticed a difference in demand for your language services or language tools that you can attribute to the economy?”
Regionally, the numbers were mixed. Demand among Asian members decreased a dramatic 28 percentage points from last quarter perhaps because the first quarter results were so strong (71 percent in the first quarter versus 43 percent in the second quarter). This is probably also why Asia had the greatest number of respondents reporting a decrease in demand at 29 percent. The strongest reporting by region this quarter came from North American members, with 63 percent reporting an increase in demand and 13 percent reporting a decrease. European members were a close second with 58 percent showing increased demand, and 19 percent reporting a decrease, a healthy decline from first quarter when 36 percent of respondents reported a decline.
Meanwhile, optimism that growth will continue is on the rise again. Having soared one year ago to 77 percent of respondents expecting growth in the upcoming quarter, it dipped significantly in the second half of 2010. But this quarter optimism crept back up to 69 percent, an increase of five percentage points over last quarter. Concern about decreased demand remained low at eight percent, up 1.5 percentage points from last quarter. The question is whether the optimism will continue in the second half of the year despite macro-economic concerns about debt, housing and unemployment.
Responses to the survey question “What demand do you anticipate in the next three months compared to the last three months?”
Regionally the numbers were strong, with optimism in Asia and Middle East/Africa particularly strong. All member respondents in those regions (100 percent) believe they will have ‘somewhat increased’ or ‘greatly increased’ demand (an increase of 14 percent in Asia and the same as last quarter in the Middle East/Africa). North America numbers were similarly positive with 88 percent expecting growth. Some expectation for declines were reported in Europe, North American and South America, but they were all slight (9 percent, 13 percent and 9 percent respectively).
Hiring and Layoffs
Hiring globally is holding steady with more members hiring than not. In the last three quarters, hiring has hovered around 55 percent (54 percent in fourth quarter 2010, 58 percent in first quarter, and 56 percent this quarter). While the numbers are not stellar, they do point to continued slow improvements in jobs. Regionally, hiring was about the same as the first quarter with North America hiring the most (three-quarters of respondents reported hiring) and Europe hiring the fewest (51 percent).
Generally, those who have hired have increased their total number of employees. Forty-one percent reported a one to five percent increase in employee numbers; 7 percent show a 20 percent increase. A solid 30 percent reported no change in overall employee numbers, indicating that they are replacing staff as they leave but not creating new positions.
Meanwhile, layoffs actually grew over last quarter. While last quarter only 4 percent of member respondents reported layoffs, this quarter the number increased to 11 percent, the highest it has been since the second quarter of 2010. However, anticipated layoffs were quite low, with only 4 percent expected to have layoffs in the next three months. The only members reporting anticipated layoffs came from Europe, and even then the number is quite small.
There was more good news with revenues. When asked whether revenues increased, decreased, or stayed the same in the past quarter, more than fifty percent of respondents reported an increase, the first time the majority saw an increase since we began asking this question two years ago. And the increase was significant, up seven percentage points from first quarter (from 46 percent to 53 percent). Meanwhile, those reporting a decrease declined to a record low of 16 percent. The fortunes for members have made almost a perfect flip from second quarter 2009. At that time, 53 percent reported a decline and 19 percent reported an increase. This quarter, 16 percent reported a decline and 53 percent an increase. Hopefully these numbers will continue the current trajectory.
Responses to the survey question “In the last three months, my revenues have increased, decreased, or stayed the same.”
The numbers by region showed North America with the strongest revenue numbers, up one percentage point from last quarter at 63 percent. Asia also had strong numbers—57 percent of respondents reported growth, and 14 percent of those saw increases of more than 50 percent. South America had the biggest decline in revenues at 27 percent, which was a significant increase over last quarter (10 percent that quarter), but still much lower than fourth quarter when 50 percent of South American respondents had a decline. In Europe, more than half had an increase in revenues, matching the global average of 53 percent.
The GALA quarterly member pulse survey is distributed to members each quarter. This quarter approximately 30 percent of our membership of 258 companies completed the survey.
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