Business activity increases again

Business activity among Irish companies continued to increase in the third quarter of the year, but the pace of improvement has slowed.

The autumn edition of the quarterly business sentiment survey from KBC Bank Ireland and Chartered Accountants Ireland noted that the hesitant recovery is keeping the jobs market under pressure.

Increased uncertainty is emerging as the key issue for Irish business at present, with spending and hiring plans postponed, it added.

While the latest survey suggests the economy is still marginally growing, it is struggling to build any substantial momentum.

“Irish business activity levels have continued to increase through the past three months but the pace of improvement has weakened somewhat, with only marginally more companies reporting higher rather than lower output levels of late,” said Chartered Accountants Ireland president Austin Slattery.

“While further growth is expected in the final quarter of 2012, firms are notably more cautious than they were three months ago and are adopting a wait and see attitude rather than stepping up output and employment.

“Unfortunately, as both Irish companies and consumers appear cautious and unwilling to commit to increased spending at present, this suggests any recovery will remain lacklustre.”.

“Worries about the health of the global economy and particular nervousness about what measures might be introduced in Budget 2013 are hitting companies’ expansion plans,” he said.

“This uncertainty has hit domestic-focused firms hardest,” Mr Slattery added.

While further softening in growth outlook was broadly based, sector-wise, the manufacturing sector bucked the trend with an increase in the number of firms forecasting strong business activity and 50% saying they had increased staff levels in the past three months.

But a renewed weakness is evident among firms directly focused on selling goods and services to consumers, according to KBC chief economist Austin Hughes.