FRANKFURT (Reuters) -Euro zone firms remain optimistic about their growth prospects but are also experiencing pressure on their profits, in part due to trade tensions, an ECB survey showed on Monday.
Euro zone growth has been lukewarm in recent years as a long expected recovery has proved elusive but businesses continue to maintain high employment levels as they remain confident of an upturn ahead.
A net 8% of firms reported an increase in turnover over the last three months and a net 23% are optimistic about developments in the next quarter, the ECB said in its quarterly Survey on the Access to Finance of Enterprises.
However, firms continued to see a deterioration in their profits with the decline being more widespread among small and medium-sized enterprises.
“Most firms reported that they had been affected to some extent by trade tensions, with firms exporting to the United States and firms in the manufacturing sector being the most exposed,” the ECB added.
Around 30% of firms expressed concerns regarding delays or shortages in supply chains and firms indicated the need to seek alternative suppliers.
“Main strategies employed to adapt to the changing trade environment include refocusing sales within domestic and EU markets and restructuring supply chains,” the ECB added.
While longer term inflation expectations remained unchanged, firms cut their price growth expectation for one year ahead to 2.5% from 2.9%, the ECB added.
(Reporting by Balazs KoranyiEditing by Christina Fincher)
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