Report bleak on sentiment as jobs stabilise

Business sentiment deteriorated across most sectors of the economy over the second quarter of this year, according to a survey by the employers’ group Ibec.

The one ray of light in the report was evidence of a stabilisation in the labour market. The share of companies planning on increasing staff numbers in the coming quarter remained almost unchanged at just over 20%, with more than 50% planning no change.

The overall business confidence index has dropped to -18 from -16 at the beginning of the first quarter of 2012. Ibec noted that the survey was conducted against a backdrop of increasing tensions in the eurozone, particularly the Greek elections, and the fiscal treaty referendum in Ireland.

“Overall business confidence weakened slightly, with current conditions index down at -18 and the three-month outlook at -14. More concerning is the sharper drop in managers’ assessment of their own business,” the report states.

“The current conditions index fell to +5 from +16 in the previous quarter, while future outlook slipped to +6 from +18. Sentiment is now at levels last seen during the second half of 2010.”

Ibec surveys 400 of its members across the manufacturing and services sectors every quarter. It notes that possibly the most worrying reading in the latest survey is the softening in firms’ export expectations. The index fell to +20 from +43 in the first quarter, a sign that managers are factoring the global slowdown into future activity.

Expectations about domestic sales over the next three months dropped to -9 from -2 in the pervious quarter. Ibec notes sentiment in the retail sector remains negative “although somewhat counter-intuitively, the index reading improved from Q1”.

Confidence in the wholesale/distribution sectors weakened substantially over the quarter.