Inflation key concern for business

INFLATION is the number one concern of Irish business, the IIB Bank/Chartered Accountants Business Sentiment Survey results for summer 2007 reveals

“The key concern for Irish business remains the pace of increase in costs. The survey results suggest cost increases are exceptionally broad-based across the business spectrum. Once again, the vast bulk of companies; some 76%, report an increase in costs in the past quarter with virtually no significant cost decreases evident (only 2% of respondents said costs have fallen of late),” the report’s authors state.

And they point out that “worryingly, there is little indication that cost inflation will ease in the near term”. When asked about the outlook for costs, three out of four firms again reported an expectation of higher prices with just 3% of firms expecting costs to ease.

The survey also found that business believes there is no fear of a jobs meltdown in the Irish economy. And yesterday the FÁS/ESRI employment and vacancies survey for May shows the number of firms reporting vacancies in the private sector fell by 3 percentage points to 13% with the biggest fall in job openings coming in the construction sector.

On the jobs front the IIB Bank/Chartered Accountants survey indicates that the upbeat responses in relation to job market trends are entirely consistent with the healthy readings reported on activity levels. These are in stark contrast to gloomy commentaries on the outlook for employment.

“In the past three months, 39% of businesses said they had increased headcount while just 11% reported a drop in employment.

“This reading remains extremely strong by comparison with other countries and suggests both buoyant net employment gains and a very rapid pace of jobs turnover,” the report’s authors add.

The survey suggests that while Irish businesses have seen a slight easing in growth in the past three months, activity levels have generally remained strong.

“The survey responses suggest business conditions are expected to remain very solid in coming months. The message coming from companies that their activity levels will strengthen rather than weaken ... contrasts starkly with some recent commentary that envisages a looming period of notably weaker growth for the economy as a whole,” the report states.