Brexit hampering business confidence

Business confidence amongst Irish companies has dipped to its lowest level this year, with the ever-changing uncertainties arising from Britain’s decision to leave the EU creating fresh concerns, according to a new survey.

After a strong showing in August, the September edition of Bank of Ireland’s monthly ‘economic pulse’ index — published this morning — makes for more sobering reading.

The overall index — which measures consumer, business and regional economic sentiment — dropped by three points to 90.4, making for the lowest reading to date in 2016.

Household confidence and consumer sentiment actually rose for a second consecutive month, but a less upbeat feeling amongst companies in the industry, services and retail sectors pulled the Business Pulse down, which had been more positive in August.

The study surveys around 1,000 households around the country and more than 2,000 businesses on a monthly basis.

“While sentiment remains at a high level, Brexit has led to an increase in uncertainty, and a general softening in sentiment is evident when the recent Pulse readings are compared with those earlier in the year,” said Dr Loretta O’Sullivan, chief economist at Bank of Ireland.

“While we saw an overall lift last month, business sentiment is a little unsettled as firms continue to assess the impact,” she added.

The business sentiment index fell from 94 points in August to 89.6 for this month, with last month’s jump in retail sector confidence more than reversed by a near eight point reduction this month.

The data also showed firms in the services sector scaled back their near-term expectations for business activity in September. However, there was a significant rise in sentiment among construction firms, with their reading rising by 12.3 points to 104.4.

“The construction sector is leading the way when it comes to job creation, with some 29% of firms planning on hiring in the next three months.

"Across the other sectors sentiment has dropped this month, following a strong performance last month in the retail and industry sectors,” said Dr. O’Sullivan.