Business activity and personnel hiring are both expected to continue growing strongly this year on the back of a marked increase in economic confidence.
While the latest edition of the KBC Bank (Ireland)/Chartered Accountants Ireland Business Sentiment Survey, covering the first quarter of this year, stresses its latest positivity points to “another step-up” in conditions, rather than a sea-change, it said “the upturn continues to spread more widely across sectors and firms, underpinning confidence that it will continue and strengthen further”.
The latest survey shows positive sentiment among companies reached the highest point since 2007 during the first quarter.
However, it does contain some warnings, with one in five firms saying it is difficult to find suitable staff.
“The survey shows a very encouraging further improvement in Irish business conditions, in early 2015, that suggests another very positive year of growth in activity and employment,” commented CAI chief executive, Pat Costello. “The business sentiment index emphasises that momentum is building steadily and spreading across sectors, but it also cautions against exaggerating the scale of the upturn.
“Nearly two-thirds of companies point to rising business volumes. A strong result; but about a quarter report steady activity and one-in-10 see ongoing declines in output. So, while the survey points towards a very solid upturn, it is not suggesting the boom is back.”
Austin Hughes, chief economist at KBC Bank Ireland and co-author of the survey, is in agreement.
“There is a strong sense that uncertainties are easing but companies also note a diverse range of concerns. So, businesses are not simply being carried forward on favourable tailwinds that would traditionally mark the upswing in an economic cycle.
“For some, the key issue remains disappointing demand, for others more intense competition of late and other companies are grappling with an increased regulatory burden and a range of different priorities.
“So, the new normal is one in which Irish companies must continue to adapt and improve to remain viable.”
The survey also suggests any political uncertainty, ahead of next year’s general election, is not a major concern for business at present.
However, responses suggest some firms, especially in areas like construction and consumer-focused sectors, are feeling that some political unrest could dampen domestic demand.
“So, the looming election is seen as a potential distraction rather than a potential disaster,” said Mr Hughes.
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