Confidence up but ‘pitfalls remain’

As the new year approaches, businesses are feeling more confident about their prospects, according to the latest business sentiment survey published by the Irish business body, Ibec.

The survey found that business sentiment has recovered from the depression it went through in the middle of the year. Exporters are particularly confident that the domestic economy has improved on this time last year.

Ibec chief economist Fergal O’Brien said there was a renewed sense of optimism in business but pitfalls still remain for the economy.

“The domestic economy is weak, but there are increasing signs of stabilisation in consumer spending and housing, while business investment in machinery and equipment is growing robustly. We still face many economic challenges... weak growth in Europe and a fragile domestic economy remain the big worries for 2013.Unless we see progress on both these fronts, we will not tackle the unemployment crisis,” he said.

Exporters were the most confident. The final quarter saw exporters’ sentiments rise from plus 12 to plus 33.

The survey said that improvement in exporters’ confidence was due to the resilience of certain export sectors and recovery in parts of that had declined due to a fall in external demand.

“Exports have slowed since the start of the year because of difficult trading conditions in Europe, but 2012 will still be a record year. The exporting sector is driving the recovery and this strong performance is set to continue in 2013,” said Mr O’Brien.

The survey found that firms were reporting a strong pipeline of orders with high-tech firms out-performing the traditional sector.

“Most high-tech firms continue to report strong order book expectations, while traditional manufacturing sectors show a marked improvement following a couple of quarters of weak sentiment,” the survey said.

Nearly half of all businesses surveyed said that they expected to increase their profitability, which is in line with an upward trend of an increasing number of firms reporting increased profits over the last nine months. The increase in firms confident of turning a profit has come on the back of increased productivity.

Mr O’Brien said a deal on Irish debt would be required to stimulate the economy.


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