Job gains matching losses: survey

Irish business activity levels have shown their first clear improvement in nearly five years, according to a survey.

However, that study also warns that a meaningful recovery is still three years away.

The spring edition of the Business Sentiment Survey from KBC Bank (Ireland) and Chartered Accountants Ireland shows that the level of job gains is now matching that of job losses for the first time in more than four years.

Despite significant differences seen between a number of sectors, the study gives a hint that stability is emerging in employment.

John Hannaway, president of Chartered Accountants Ireland, said that while the survey is “pointing towards an improvement”, the current year is unlikely to see a huge pick-up in activity.

“It remains the case that the environment is tough and companies in areas such as construction or those focused on the domestic consumer continue to report weaker demand.

“However, at an aggregate level, there seems to have been a pick-up in business volumes of late, and there is also an expectation of further modest gains in the months ahead,” he said.

“The general expectation among Irish businesses is that the next 12 months will see only a limited pick-up in activity, but a gradual broadening of the recovery should take hold within three years.

“However, even at that stage roughly 10% of companies think they will be producing less than today. So, Irish business seems to be taking a very cautious view of the outlook.”

Despite the general signs of employment stability, the survey shows that around half of Irish companies don’t expect to be operating on a notably greater scale than they are now at any time over the next five years.

“As a result, they don’t intend to add additional capacity over this period. A cautious approach is understandable, but it will act to restrain the recovery, at least in its early stages,” said Mr Hannaway.

Meanwhile, KBC Bank chief economist Austin Hughes noted that when the survey asked about the upcoming fiscal treaty referendum, responses indicated a fair degree of uncertainty on the matter among firms.