Press release

Business activity continuing to grow albeit at a slightly slower pace in Q1 2017 Hiring a little more cautious of late  but this may also reflect some areas of skill shortages Companies slightly less worried about Irish economy but still quite cautious Brexit awareness varies widely across firms - 21% of companies have strong sense of likely Brexit impact on their operations but 27% have little sense as to how it will affect them Sterling weakness now having widely differing impacts across Irish businesses; hurting 31% of firms but helping 13% 40% of companies already taking Brexit related action in many instances because of FX effects Brexit and weak demand key concerns but some firms prioritise  staff and building constraints Irish business sentiment improved through the spring of 2017as the Irish economy has thus far defied fears of a marked slowdown while companies report ongoing and healthy growth in their own activity levels. The details of the KBC Bank/Chartered Accountants Ireland business sentiment survey do hint at some easing in thepaceof increase in output and hiring of late,as well as ongoing challenges in a number of areas.However,the broad message is that while significant risks to Irish business prospects persist,the reality of early 2017 has not been as difficult as was feared. As a result, companies are now marginally more positive about the coming quarter. The KBC Bank/Chartered Accountants Ireland business sentiment index climbed to 110.6 in spring 2017 from 104.6 in the previous quarter. This marks the third successive increase in the index following a sharp likely Brexit related weakening last summer. As major uncertainty persists in regard to the global and indeed the domestic economic outlook, producer confidence remains some way below the levels seen in late 2015 (131.1), but the spring survey shows Irish business sentiment is now on an improving trajectory. The survey revealed significant differences in companies’ understanding of the implications of Brexit for their businesses.Just 21% of companies believe they have a strong sense of the consequences of Brexit for their activities. While a further 53% of companies report they have some sense of what Brexit might mean for their operations, a substantial 26% say they have little sense of what it will mean for them. Some 31% of firms noted that Sterling weakness was already having an adverse effect on their business while 13% indicated it was having a positive effect. In this way, the surveyhighlights the complex nature of our economic links with the UK andunderscores the major risks in a ‘one approach fits all’ policy in relation to Brexit even at the sectoral level. Commenting on the results,Chartered Accountants Ireland Chief Executive Pat Costello, said: “The survey suggests 2017 has started positively for Irish business with broadly based improvements in activity and employment. While the pace of growth has eased slightly and firms remain cautious about an uncertain environment, early 2017 has been notably less difficult than they had envisaged. The rise they are seeing in their own business volumes, allied to better than expected news on the broader Irish economy, is now translating into improving confidence.” Austin Hughes, Chief Economist, KBC Bank Ireland,who carried out the analysis, said: “Although Brexit concerns are felt widely, both the expected impact and the level of preparedness for Brexit vary widely between companies even in the same sector. Only 21% of firms say they have a strong sense of the likely impact of Brexit on their business, but it is concerning that 27% have little sense of the potential effects. While 40% of companies have already taken action, this includes those reacting to the impact of Sterling weakness on their business.” The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of Chartered Accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Spring 2017 survey was conducted from 28 March to 3 April 2017 and the results presented are based on 352 completed responses. Read the full report here. ENDS For further reference contact: Sinéad Healy, Gibney Communications, 01 661 0402 / 086 061 2441 Austin Hughes, Chief Economist KBC Bank, 087 669 6972 Brendan O’Hora, Director, Communications and Marketing, Chartered Accountants Ireland, 01 6377298

Apr 24, 2017
Press release

Winter 2016/2017 KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey  (Full survey report attached) Activity has picked up of late but caution on outlook for broader economy still prevails Employment growing but slower hiring pace likely reflects uncertainty and rising wage costs Pay increases becoming the norm; Some 83% of companies see their average pay increasing in 2017 while 16% see no change Average pay rise still modest but wages the main driver of rising business costs  40% of companies report Brexit already impacting their business with negative effects outweighing positives by about ten to one Increased uncertainty and exchange rate volatility the key issues Increased uncertainty also seen as early and important effect of new US administration. Roughly one in three firms expects some impact with expectations of negative effects outweighing positives by about seven to one. Irish business sentiment improved at the start of 2017 following a marked decline through 2016 as companies’ activity levels proved more resilient than had been feared and concerns about the broader Irish economy eased a little. Irish based firms expect growth in their business volumes in the months ahead, but there are signs of a more cautious approach to hiring. This may owe something to an increasing focus on accelerating wage costs but it also likely reflects heightened uncertainty about the implications for their businesses of Brexit and the new Trump administration in the US. Balancing the conflicting influences of robust increases in their own business volumes of late and the risks posed by major policy shifts in the UK and US poses a dilemma for many companies who would usually be upscaling their output, hiring and capacity levels at this point in a ‘normal’ cycle. Instead, firms may opt to take a cautious or defensive approach to their business planning for the coming year. This would be consistent with the more cautious approach to hiring even in the face of an anticipation of notably stronger activity levels in the coming quarter. In this, and some specific sectoral responses, the survey suggests heightened uncertainty may already be constraining Irish business growth in early 2017.   The KBC Bank Ireland/Chartered Accountants Ireland business sentiment index rose to 104.8 in the winter quarter of 2016/17, a modest improvement from the 100.1 reading in the autumn survey and still well below the peak reading of 131.1 recorded a year ago. As the survey took place from January 17th to 25th, these results should be seen as representing Irish business thinking in early 2017. One area where Irish firms appear to be taking a more cautious approach of late is in relation to pay rolls. This likely reflects increased uncertainty about the business environment prompted by Brexit and the Trump administration in the US. As a result, new hiring has remained somewhat softer of late and the results were marginal pick up in the number of firms reporting a reduction in their head count. In addition, firms signalled that wages were the area of their cost base showing the clearest increase. As relatively few firms signalled increases in their selling prices, higher wages may be prompting some pull–back in hiring. The survey suggests that modest pay increases are likely to be the norm for most firms in 2017. Four out of five companies surveyed say they will raise average pay rates with about half of these envisaging increases of less than 2%, and a broadly similar number planning increases of between 2% and 5%. Fewer than one in twenty firms see average pay rising by more than 5%, while about one in six don’t see any increase in their average pay this year. Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “Irish business sentiment has started 2017 on a positive note as companies’ activity levels proved to be a little stronger than had been feared in late 2016 and expectations for output volumes in coming months remain promising. In a more ‘normal’ recovery, expansion plans would now be ramped up, but the survey suggests increased uncertainty of late about the impact of Brexit and more recently the prospect of a major policy shift in the US. This reflects the importance of the US to many Irish based businesses. One in three firms envisage some impact from the Trump administration on their activities, with negative concerns outweighing positive expectations by a factor of about seven to one.” Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello, said: “Just under half of the companies surveyed indicated that Brexit has already had some impact on their business, with negative effects outweighing positive effects by about ten to one. Increased uncertainty and exchange rate movements were cited as the key sources of difficulty. “ The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of Chartered Accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies.  The winter 2016 / 17 survey was conducted from 17th to 24th January 2017 and the results presented are based on 371 completed responses. Reead the full report here. ENDS For further reference contact: Sinéad Healy, Gibney Communications, 01 661 0402 / 086 061 2441 Austin Hughes, Chief Economist KBC Bank, 087 669 6972 Brendan O’Hora, Director, Communications and Marketing, Chartered Accountants Ireland, 01 6377298  

Feb 14, 2017
Press release

              Chartered Accountants Ireland / KBC Bank Business Sentiment Survey, Winter 2016   Irish business sentiment stabilises in 3rd quarter after sharp 2nd quarter fall. Some easing in the pace of activity growth and new hiring may reflect Sterling impact as well as a more cautious Irish consumer. Broader than expected Brexit effects may be suggested by slowdown at a range of consumer-focussed companies. Businesses cautious but pessimism about Irish economy eases slightly as immediate Brexit impact less traumatic than feared. Surprising cost uptick may reflect firmer energy and payroll costs. Could pricing policies be throwing up unexpected results? Brexit and uncertain global outlook seen as key business concerns for 2017.   Tuesday, 1st November, 2016.  After a sharp pull-back in Irish business confidence in the summer survey that significantly reflected the influence of the UK vote to leave the EU, the KBC Bank/Chartered Accountants Ireland business sentiment index was effectively unchanged in the most recent three-month period to late October. The October reading reflects notable but largely offsetting movements in various elements of the business sentiment survey. As such, the details of the survey hint at notable changes in the Irish business climate of late. A clear, if contained, slowdown in the pace of increase in activity and employment was reported by companies responding to the survey, particularly by those selling consumer goods and services. We interpret this as highlighting the pervasive natureacross Irish economic sectors of the difficulties posed by Brexit. Acting in the opposite direction was a partial reversal of the sharp drop in business confidence in the broader Irish economic outlook that had followed the UK referendumvote to leave the EU. While companies remain cautious, the absence of a more immediate and more widely seen deterioration in Irish economic conditions may have eased some more extreme fears. It might be suggested that the previous reading of the business sentiment survey captured the knee-jerk reaction of companies to the UK ‘Brexit’ vote in that it emphasised emerging concerns but didn’t report any instant impact on activity levels. Perhaps, surprisingly, the most notable easing in business growth came in the area of consumer goods and services which reported quite a marked stepdown in growth from particularly buoyant responses given to the previous survey. This result seems broadly consistent with a more cautious tone to recent consumer sentiment readings as well as somewhat softer retail sales and spending tax data of late. Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costellosaid: “The broadly stable business sentiment index reading may be a little misleading in that the details of the survey suggest notable but broadly offsetting changes in the business climate affecting Irish based firms; growth in activity and hiring has clearly moderated of late and while Brexit is a major concern, companies are also signalling some relief that the immediate fallout of the UK vote has not been as severe as some of the more apocalyptic predictions had envisaged.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “One slightly surprising aspect of the survey is that firms supplying consumer goods and services reported the most notable pull-back in growth of late. This probably owes something to a cautious Irish consumer but it may also reflect some Brexit related issues in areas such as retailing or the hospitality sector stemming from current Sterling weakness. If we are correct in this interpretation, the survey suggests that adverse Brexit impacts may be felt much more widely across the Irish economy than is sometimes suggested.” Pat Costello also said: “While companies are focused on a wide range of concerns in an increasingly uncertain global economic environment, the survey clearly signals that Brexit is seen as the major external influence likely to affect business outcomes in the year ahead. Importantly, such views are common across sectors rather than concentrated on a few specific areas. The survey also suggests that vulnerability to, and readiness for, the impacts of Brexit varies widely, even across firms in the same sector.” Commenting further, Austin Hughes said: “In marked contrast to the frequently painful experience of the austerity years, very few companies see the recent Budget materially altering their business prospects for the coming year. A small number of firms see the Budget enhancing the outlook for Foreign Direct Investment, increasing the likelihood that they will take on additional employees, but the economic and fiscal progress of recent years means the Budget is no longer a ‘make or break’ event for Irish business.”  The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of Chartered Accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies.  The Autumn 2016 survey was conducted from 14th to 21st October 2016 and the results presented are based on 330 completed responses. Read the full report here. Ends. For reference: Sinéad Healy, Gibney Communications, 01 661 0402 / 086 061 2441 Austin Hughes, KBC Bank, 087 669 6972 Brendan O'Hora, Marketing Manager, Chartered Accountants Ireland, 01 637 7298

Nov 01, 2016
Press release

                Chartered Accountants Ireland / KBC Bank Business Sentiment Survey, Summer 2016   • Activity growth across Irish companies remained robust in past three months as did hiring • Outlook for business still healthy but expectations clearly scaled back • Confidence in broader Irish economy sharply downgraded • Brexit seen as key risk but not the only cloud in economic sky • Some 80% of companies now considering some implication of Brexit for their business • Sterling weakness the main risk but one in ten firms looking at potential relocation into or out of Ireland While business activity weakened only marginally, Irish Business sentiment worsened markedly in the past three months. Concerns regarding Brexit, coupled with broader uncertainties about global economic prospects, caused a marked downgrading of the general business climate which, in turn, prompted companies to take a more cautious approach in terms of their own future output and hiring.   The KBC Bank/Chartered Accountants Ireland Business Sentiment Index dropped to 99.9 in the past three months from 117.7 in the spring quarter.  This represents the sharpest quarterly fall since the third quarter of 2010 and brought the index back to its lowest level in three and a half years. As such, it clearly signals a marked change in the mood of Irish business of late.  On the basis of the past relationship between the business sentiment index and Irish GDP, the most recent survey still seems to be pointing towards reasonably solid economic growth in 2016. However, it signals a clear easing in the pace of growth. The latest sentiment reading appears consistent with GDP growth of around 3.5-4% at present. The range of survey responses to questions about companies’ immediate operating environments clearly points to some cooling in the business climate of late. While the change in companies’ own circumstances is reasonably measured, the survey suggests an altogether more substantial mark-down of the outlook for the broader Irish economy. Respondents have become notably less optimistic about Irish economic prospects of late. Brexit is now regarded as the principal risk to Irish based companies’ prospects, cited as such by 40% of respondents. However, it is not seen as the only cloud in the economic sky. Slowing global demand is still widely seen as a significant concern. Perhaps more surprising is the continuing importance attached to domestic political uncertainty which was cited by 20% of respondents.     Not surprisingly, the aspect of Brexit currently regarded as the main issue for companies is the weakness of Sterling. This is to be expected given both the immediacy of such effects and the extent of recent currency movements. However, companies indicated a wide range of considerations from administrative difficulties in trading with the UK to potential relocation of activities out of Ireland. Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said: “The drop in business sentiment to its weakest level in three and a half years should be seen as a broadly based recognition of increased risks to Irish economic prospects rather than a sign of panic or any dramatic deterioration in current conditions. Notably increased uncertainty of late and the particular threats posed by Brexit have prompted companies to downgrade expectations for the general economic environment but they continue to signal healthy growth in their own activities.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “The summer survey shows firms reporting continuing strength in their business volumes and hiring of late and forward-looking responses suggest this should continue, albeit at a more modest pace. On the basis of historic trends, the business sentiment survey appears consistent with a growth rate in Irish GDP of about 3.5-4% at present.”  Pat Costello also said: “In the wake of the recent UK referendum, as many as 80% of companies that responded to the survey indicated some current focus on the implications of Brexit for their activities. This emphasises that the consequences of the UK’s exit from the EU will be widely felt right across Irish business rather than confined to some specific sectors. Some 13% of firms have already altered their activities or business plans but the survey suggests a larger recalibration of Irish business is in prospect.” Commenting further, Austin Hughes said: “It is scarcely surprising that Sterling weakness was flagged as the main concern and, with poorer UK economic conditions also featuring prominently, it is clear that near term risks predominate. While 50% of the companies surveyed were focussed on the threats posed by Brexit to their business, 20% indicated they were primarily focussed on opportunities it might present.  In some instances, this may reflect the necessity to adapt in order to survive but these results emphasise the need to consider the many dimensions to the impact of Brexit on Irish business, some of which may be positive.”      The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of Cchartered Aaccountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies.  The sSummer 2016 survey was conducted in from 28th July to 11th August 2016 and the results presented are based on 321 completed responses. Read the full report here. Ends. Reference: Bryan Rankin, Marketing Manager, Chartered Accountants Ireland T: +353 1 637 7268 Sinéad Healy, Gibney Communications, 01 661 0402 / 086 061 2441

Aug 18, 2016

Winter 2014 KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey Main points Irish Business Sentiment Index steady in late 2014. Activity up strongly but firms slightly less upbeat about broader economic climate. Rising output also boosting employment at end 2014. Two thirds of firms to raise pay in 2015 but increases set to be modest. Four out of five firms see themselves in recovery mode in 2015. Roughly half of firms to boost capacity in 2015 with one in ten planning cutbacks. Almost half of businesses expect a modest boost from lower oil prices. Sluggish global economy and domestic uncertainty may be restraining upturn at present. Irish business sentiment held broadly steady in the final months of 2014, however, this doesn’t signal unchanged conditions, according to the latest KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Index. Instead, this outturn reflects two contrasting influences that largely offset each other in the past three months. Companies report increased activity and employment levels but this was countered by increasing caution about the general economic climate.  As a result, the KBC Bank Ireland/Chartered Accountants Ireland index edged down to 124.3 from 124.8 in the third quarter.  A movement of this limited magnitude effectively signals no material change in the business sentiment index as a whole. However, the details suggest some interesting and contrasting developments of late that again emphasise the unusual and uneven contours of the emerging upturn even if domestic spending is now showing clearer signs of recovery. Speaking on the release of the report, Mr Pat Costello, Chief Executive, Chartered Accountants Ireland noted: “Irish business turned the year on a very strong note with activity levels at their strongest since 2006 and employment trends improving significantly. Further output gains are envisaged through 2015 but companies sounded a slightly more cautious note about the general economic climate, perhaps reflecting greater global nervousness as well as some increased domestic political uncertainty of late. These circumstances as well as the legacy of the recent crisis mean that while a solid recovery is underway it is not simply a case of onwards and upwards for all businesses.” Mr Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “The pick-up in activity over end-year was particularly notable in businesses focussed on domestic spending such as construction and consumer activities. Overall, recovery is clearly broadening but the survey suggests that the overall rate of growth may be easing somewhat from the breakneck speed suggested by GDP data for the first half of 2014. So this year may see improvements across a broader range but possibly at a more modest pace than last year.”   Mr Costello also noted: “Four out of five companies consider themselves to be at some stage of a recovery cycle. So, roughly half expect to increase either output capacity in 2015 by adding to staff or infrastructure but nearly one in ten are still making cutbacks of one form or another. This suggests the recovery across the Irish economy is still quite uneven. Some assistance is expected from lower oil prices with almost half of firms envisaging a modest positive impact on their businesses but these results also imply little expectation that falling oil prices will lead to markedly stronger spending.”   Mr Hughes said: “Two in three companies are planning pay increases in 2015 with most of these set to be under 2% and broadly similar to the pattern of 2014. Only a very small number of companies envisage large pay increases. Intense competition in a disinflationary global environment, continuing uncertainty and a caution born of the recent crisis are all acting to constrain average pay growth.” The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Winter 2014 survey was conducted between Monday 5th January and Friday 9th January and the results presented are based on 460 completed responses. The full survey report is available here. For further information contact: Austin Hughes, Chief Economist, KBC Bank Ireland          T: 01 664 6889 Brendan O’Hora, Director, Communications and Marketing, Chartered Accountants Ireland                       T: 01 6377298 Mark Leech, Gibney Communications Work 01 661 0402

Jun 17, 2016
Press release

              Spring 2016 KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Survey Firms report modest but broadly based easing in pace of business growth of late Jobs growth continuing but hiring plans scaled back slightly Easing in external costs but further cost increases in domestically focussed firms Views on Irish economy still positive but less bullish than previously seen Global slowdown seen as key threat to Irish business prospects Brexit and domestic political stability also seen as key issues Only one in four companies has taken any action in anticipation of Brexit Irish business sentiment weakened notably in the first quarter of 2016 from the nine year high recorded in the previous quarter. This pull-back stemmed from some easing in the pace of output growth and, more importantly, from a notably increased level of uncertainty which weighed on the mood of the corporate sector in Ireland. It should be emphasised that this reading still suggests the Irish economy is growing at a reasonably healthy pace at present. More importantly, however, the survey suggests there has been a clear easing in the strength and spread of Irish economic growth since the turn of the year.   The KBC Bank/Chartered Accountants Ireland business sentiment index fell to 117.7 in the first quarter of 2016 from 131.1 in the final three months of 2015. While the previous reading was the highest in the nine years of the survey, the latest is the weakest since the autumn of 2013. Recent years have seen the sentiment index follow a reasonably similar path to the trend in Irish GDP. This comparison emphasises that the drop in the sentiment index hints at a drop in the pace of Irish economic growth of late as distinct from a dramatic weakening in economic conditions. Nonetheless, the index implies there has been a notable easing in the forward momentum of the Irish economy in early 2016. The KBC Bank/Chartered Accountants Ireland business sentiment survey also asked a number of additional questions on topical issues, including whether firms felt that downside risks to their companies’ activities had changed notably of late. While roughly 60% of respondents indicated there had been no change to their businesses, a substantial 34% noted an increased downside risk to their business of late while just 3% suggested that downside risks had eased.   Irish based firms were then asked to indicate what they saw as the biggest risk facing their businesses at present. Reflecting the importance of exports to a broad swathe of Irish companies, it is not entirely surprising that weaker global demand emerged as the most significant threat and was cited by 49% of respondents. The prominence attached to ‘Brexit’ –cited as a key risk by 37% of firms, as a key concern in relation to their prospects is to be expected and a notable feature of the responses was their consistency across sectors. That said, our survey responses suggest it has not prompted any dramatic shift in business behaviour. Within the range of actions taken by companies ahead of the UK referendum, some 4% of respondents indicated the prospect of Brexit had caused them to postpone, scale back or cancel activities while 1% of firms had increased activities. At the margin, these actions would have some limited impact on overall activity levels but it seems that the most notable consequence of the looming UK referendum is to feed into a more broadly based mood of caution of late. So, it seems that many companies have yet to fully assess what Brexit might mean specifically for their business.   Domestic political uncertainty also featured as a significant issue for many Irish businesses, mentioned by some 32% of respondents and this finding is understandable given that the survey was taken between the 6th and 12th of May, just before a new Government was confirmed. Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said: “The sentiment survey hints at a clear easing in the pace of growth in business activity levels across Irish based firms in early 2016. While output and employment are still increasing at a healthy rate, the scale and spread of those gains is altogether more modest than the trend seen through the past year or two.  This is associated with a notably more cautious assessment of the general economic outlook as an increasingly uncertain global environment weighs on business sentiment.”    “The survey suggests business costs have eased somewhat of late particularly for internationally facing firms but continuing if modest increases in the costs of domestic focussed companies underlines the importance of ensuring that the recovery in domestic spending doesn’t prompt any threatening loss of competitiveness.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “Although activity and jobs are growing, Irish companies report a clear increase in downside risks to their business volumes of late. A weakening of global growth is widely seen as the main threat but the possibility of Brexit and domestic political stability are also regarded as key issues. The range of concerns raised in the survey highlights the variety of clouds in the economic sky at present and the diversity of the business circumstances of individual companies.”    “Just under half of the companies surveyed are unsure or not focussed on the potential impact of Brexit on their businesses but 46% are now focussed on the risks it may pose to them while 10% are considering possible opportunities it might present. However, the survey hints at a lack of readiness on the part of Irish firms in the event that the UK leaves the EU, perhaps reflecting the many uncertainties involved. Only 26% of companies say they have taken action such as seeking advice or examining alternative business relationships and only 5% of firms have adjusted their output or hiring in response to the possibility of Brexit.”      The KBC Bank Ireland/ Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies.  The Spring 2016 survey was conducted in from 6 to 12 May 2016 and the results presented are based on 325 completed responses. Ends. For reference: Karen Jones, Gibney Communications, 01 661 0402 / 086 866 4501 Austin Hughes, KBC Bank, 087 669 6977 Read the full report here.

May 19, 2016
Press release

Winter 2015 KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Survey Business volumes and employment show continued growth at end 2015. Domestic activity accelerates while manufacturing growth eases. Domestic costs continue to build; increases across widest range of firms since 2008. Output growth among Irish based companies consistent with 7% GDP growth in 2015. Wages to rise in 8 out of 10 companies in 2016 with just over half of pay rises less than 2%. 54% of firms don’t see direct impact on their business from ‘Brexit’ but 42% fear negative effects and only 4% see positive consequences. Increased economic uncertainty cited as key risk from ‘Brexit’ by 67% of firms with greater currency fluctuations ( 54%) and increased costs of doing business with UK (38%) also problematic A combination of stronger activity levels at reporting companies and increasing optimism about the broader Irish economy meant Irish business sentiment reached a new nine year high in the final quarter of 2015. The improvement in the sentiment index in the last three months was relatively modest but fairly broadly based. This hints that the economic recovery continues to spread further across the various sectors of the Irish economy but the pace of economy-wide growth appears to be stabilising rather than continuing to build. The KBC Bank Ireland/Chartered Accountants business sentiment index increased to 131.1 in the final quarter of 2015 from 130.8 in the previous quarter. While this was a relatively modest gain, it was sufficient to push the index to the highest level since the survey began in 2006.   Activity levels across firms operating in the Irish economy continued to increase as 2015 drew to a close, however, the pace of growth was only fractionally ahead of the previous quarter. With two thirds of companies signalling increased business volumes and less than 6% indicating weaker activity, the survey suggests a very broadly based upswing is now evident across Irish based companies. The most notable development through recent quarters is the increased positivity of businesses focussed on the domestic economy. The survey suggests the emerging recovery in domestic demand is spreading markedly. In contrast, output increases in manufacturing companies- while still very clear-cut- were less widespread than previously reported and one potentially concerning aspect of the 4th quarter survey is a further uptick in the number of firms reporting an increase in costs in the past three months. Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “Irish based companies report continuing increases in activity levels and employment at the turn of the year. With similar gains expected in early 2016, business sentiment has risen to a new nine year high. Significantly, companies are reporting increases in their business volumes in 2015 that broadly tally with current estimates suggesting Irish GDP grew by close to 7%. So, the sentiment survey suggests that from corporate Ireland’s perspective, recovery is now both strong and broadly based.” “More than half of the companies surveyed indicated that pay was the area of their costs showing the clearest upward trend of late. Roughly 8 out of 10 companies expect to increase average pay rates in 2016. Slightly over half of these see average pay rising by less than 2% with the vast bulk of the remainder predicting increases of between 2 and 5%.”         Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said: “A further uptick in Irish business costs in this survey could reflect difficulties some companies might have in sharply scaling up their activity levels. It may also reflect a correction after a very sharp fall in costs through the downturn as well as possibly owing something to the impact of currency movements on import costs. It is important not to be alarmist about this development and businesses surveyed are confident about their future growth. However, in a world of very low inflation, a rising trend in Irish costs needs to be monitored closely.” “The survey found broadly based concerns about the impact of a possible UK exit from the EU. Some 67% of firms fear a harmful rise in economic uncertainty while greater currency volatility and an increase in the cost of doing business with the UK are also significant worries. Although just over half of businesses surveyed felt there would be no direct impact on their operations, some 42% envisaged some adverse effect from ‘Brexit’ while only 4% anticipated positive consequences.” The KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Winter 2015 survey was conducted in the first business week of January 2016 and the results presented are based on 440 completed responses. Ends. 19th January 2016 For reference: Karen Jones, Gibney Communications, 01 661 0402 / 086 866 4501 Austin Hughes, KBC Bank, 087 669 6977 Read the full report here.

Jan 19, 2016

Autumn 2015 KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey Main points: • Strong business volumes and increased optimism about Irish economy boost confidence. • Broadly based increases in activity prompt increased hiring and some increase in costs. • Greater confidence in domestic economic trends now emerging. • Budget 2016 not the key influence on 2016 business outlook but will support jobs. Irish business sentiment strengthened significantly in the third quarter of 2015 reflecting companies’ own experience of increased activity levels and their greater sense of optimism about the outlook for the broader Irish economy. So, the survey reflects buoyant ‘micro’ conditions and increased confidence about the ‘macro’ environment. The KBC Bank Ireland/ Chartered Accountants Ireland Business Sentiment Index increased to 130.8 from 123.6 in the previous quarter. This is the strongest reading since the survey began in late 2006. The results suggest the upswing has become more broadly based of late and firms are increasingly confident that this will continue in the final months of 2015. There was a marked step-up in Irish business activity levels in the past three months with more companies reporting output gains and fewer reporting reduced output than at any other time since the survey began nine years ago.  The KBC Bank Ireland/Chartered Accountants Ireland business sentiment survey also included a number of supplementary questions focussed on Budget 2016 and its significance for corporate Ireland. The survey asked how important companies considered Budget 2016 was to the outlook for their business in the coming year relative to a range of other external influences. The responses suggest that Budget measures are not generally regarded as the key determinant of business prospects for 2016. With export market trends the most widely cited influence and cost trends and currency movements also prominent in responses, a capacity to successfully buy and sell on world markets is seen as the main driver of the fortunes of corporate Ireland. Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said:  “The autumn survey suggests the economic upswing is now being felt much more broadly across the spectrum of Irish business with less than 6% of companies reporting weaker activity levels in the past three months, the lowest number in the nine years of the survey. In addition to this improvement in their immediate operating environment, firms are also more confident about the broader outlook for the Irish economy as a whole. So, both ‘micro’ and ‘macro’ factors are encouraging a rise in business sentiment.” “A continuing pick-up in business volumes has seen costs edge slightly higher for a rising number of firms with 46% of respondents reporting their cost base had increased in the past three months.  As this was most evident in respect of domestically focussed firms such as those in the construction sector, it seems to reflect difficulties in scaling up activities at a sufficient pace to match rapidly recovering demand.  In contrast, firms in areas such as manufacturing reported marginally less cost pressures of late.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “A further step-up in activity levels has prompted more broadly based employment gains with 45% of firms reporting increases in their payrolls in the past three months. Perhaps surprisingly, the number of firms reporting a decline in headcount edged up to 11%. This may owe something to signs of emerging shortages of skilled staff in certain sectors but it also likely reflects the ‘new normal’ in which some firms may remain under pressure even in a generally healthy business climate.” “Budget 2016 is seen as less critical to the outlook for Irish business than a range of other factors many of which relate to the ability to trade successfully on international markets. The survey suggests that now that Budget measures are no longer subtracting from spending power or adding to business costs, they become less of a focus. However, a not insignificant 13% of companies suggest that measures introduced in Budget 2016 make it more likely that they will take on additional employees in the coming year.” ENDS Note to editors: The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Autumn 2015 survey was conducted between 14th and 20th October and the results presented are based on 363 completed responses. Read the full report here.

Oct 30, 2015
Press release

Autumn 2015 KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey Main points: • Strong business volumes and increased optimism about Irish economy boost confidence. • Broadly based increases in activity prompt increased hiring and some increase in costs. • Greater confidence in domestic economic trends now emerging. • Budget 2016 not the key influence on 2016 business outlook but will support jobs. Irish business sentiment strengthened significantly in the third quarter of 2015 reflecting companies’ own experience of increased activity levels and their greater sense of optimism about the outlook for the broader Irish economy. So, the survey reflects buoyant ‘micro’ conditions and increased confidence about the ‘macro’ environment. The KBC Bank Ireland/ Chartered Accountants Ireland Business Sentiment Index increased to 130.8 from 123.6 in the previous quarter. This is the strongest reading since the survey began in late 2006. The results suggest the upswing has become more broadly based of late and firms are increasingly confident that this will continue in the final months of 2015. There was a marked step-up in Irish business activity levels in the past three months with more companies reporting output gains and fewer reporting reduced output than at any other time since the survey began nine years ago. The KBC Bank Ireland/Chartered Accountants Ireland business sentiment survey also included a number of supplementary questions focussed on Budget 2016 and its significance for corporate Ireland. The survey asked how important companies considered Budget 2016 was to the outlook for their business in the coming year relative to a range of other external influences. The responses suggest that Budget measures are not generally regarded as the key determinant of business prospects for 2016. With export market trends the most widely cited influence and cost trends and currency movements also prominent in responses, a capacity to successfully buy and sell on world markets is seen as the main driver of the fortunes of corporate Ireland. Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said: “The autumn survey suggests the economic upswing is now being felt much more broadly across the spectrum of Irish business with less than 6% of companies reporting weaker activity levels in the past three months, the lowest number in the nine years of the survey. In addition to this improvement in their immediate operating environment, firms are also more confident about the broader outlook for the Irish economy as a whole. So, both ‘micro’ and ‘macro’ factors are encouraging a rise in business sentiment.” “A continuing pick-up in business volumes has seen costs edge slightly higher for a rising number of firms with 46% of respondents reporting their cost base had increased in the past three months.  As this was most evident in respect of domestically focussed firms such as those in the construction sector, it seems to reflect difficulties in scaling up activities at a sufficient pace to match rapidly recovering demand.  In contrast, firms in areas such as manufacturing reported marginally less cost pressures of late.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said: “A further step-up in activity levels has prompted more broadly based employment gains with 45% of firms reporting increases in their payrolls in the past three months. Perhaps surprisingly, the number of firms reporting a decline in headcount edged up to 11%. This may owe something to signs of emerging shortages of skilled staff in certain sectors but it also likely reflects the ‘new normal’ in which some firms may remain under pressure even in a generally healthy business climate.” “Budget 2016 is seen as less critical to the outlook for Irish business than a range of other factors many of which relate to the ability to trade successfully on international markets. The survey suggests that now that Budget measures are no longer subtracting from spending power or adding to business costs, they become less of a focus. However, a not insignificant 13% of companies suggest that measures introduced in Budget 2016 make it more likely that they will take on additional employees in the coming year.” ENDS Note to editors: The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Autumn 2015 survey was conducted between 14th and 20th October and the results presented are based on 363 completed responses. Read the full report here.

Oct 30, 2015

Summer 2015 KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey Main points: Slower activity growth and increased global uncertainty weighs on business confidence Survey also shows jobs growth reaching fastest pace in nine years. So, upturn still solid Costs starting to increase particularly in relation to payrolls UK exit from EU would have a marked negative effect on Irish business Uncertainty, exchange rate volatility and higher ‘red tape’ costs all influential in the event of UK exit   Business favours modest rather than major stimulus in Budget 2016 Irish Business sentiment weakened in the second quarter of 2015 as output growth easedand uncertainty about the global economic backdrop increased. The change in thinking was particularly marked in more externally focussed sectors such as manufacturing but there was also some pullback in expectations in construction as companies struggle to assess the likely momentum in recovery in this area. The KBC Bank Ireland / Chartered Accountants Ireland business sentiment index declined to 123.1 in the second quarter of 2015 from 127.7 in the previous quarter. The nature of the survey means that it is intended to capture changes in the business climate. So, the summer survey points towards a further healthy expansion in Irish business activity in the past three months but the pull-back in the index hints that business conditions have not improved as much as had been envisaged. The survey also hints at a measure of concern emerging in relation to cost pressures. Moreover, increased uncertainty of late in relation to developments in Greece and China as well as increased focus on the UK’s position within the EU may be weighing on hopes for a ‘normal’ recovery. Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said: “The summer business sentiment survey suggests that the Irish economy is doing well and companies are continuing to increase output but it also hints that the pace of growth may have eased slightly of late. Increased global uncertainty and particularly worrying headlines on Greece and China also seem to be injecting a little more caution into sentiment. Irish business is still moving solidly forward but the survey implies the steps are a little more careful of late. “While output growth may be easing slightly, it continues at a pace that entails notable jobs growth. The most encouraging aspect of the summer survey is evidence of a further strengthening of the Irish jobs market. Some 42% of companies say they have increased their payrolls in the past three months, the highest number since 2006 while just 9% have reduced employment, the lowest number in survey’s history. So, companies are stepping up hiring as the recovery seems to be entering a more mature phase.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said:  “Companies are reporting some increased pressure on pay and hiring costs of late. However, there is little evidence of higher import costs in the wake of the weaker Euro on currency markets. This likely reflects the lack of any major global inflationary pressures at present. In turn, this is consistent with responses indicating companies are finding it hard or impossible to pass on higher input costs to their selling prices.   “Some 79% of companies surveyed think the exit of the UK from the EU would have an adverse impact on the Irish economy with the majority of these judging the impact likely to be ‘strongly negative’.  As many as 40% of firms see a direct negative impact on their business in the event of ‘Brexit’ through a variety of channels with weaker activity because of elevated uncertainty, increased exchange rate volatility and a greater amount of ‘red tape’ all weighing on Irish business conditions.”  Full survey results are available here. The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Summer 2015 survey was conducted between 25 June and 6 July and the results presented are based on 309 completed responses.  For further information contact: Austin Hughes, Chief Economist, KBC Bank Ireland          T: 01 664 6889 / 087-6696972 Brendan O’Hora, Director, Communications and Marketing, Chartered Accountants Ireland                       T: 01 6377298 / 086-2432428 Mark Leech, Gibney Communications T: 01 661 0402 / 087-9053679 

Jul 15, 2015

Irish business conditions improve further in early 2015 Main points: Business Sentiment at eight year high as activity and employment  increase Confidence in broader Irish economy increases markedly Upturn easing concerns but soft demand, increased competition and regulatory burden cited as issues Most firms not seriously concerned about political uncertainty but hint it may weigh on domestic demand A very positive assessment by businesses of their operating environment prompted a rise in the KBC Bank Ireland/ Chartered Accountants Ireland Business Sentiment Index for the first quarter of 2015. The business sentiment index rose to 127.7 from 124.3 in the final quarter of 2014. So, the spring reading is the strongest in the eight year history of the survey.  Irish business conditions have continued to improve in early 2015. Although the pace of output growth eased marginally in the past three months, employment growth picked up as firms see further increases in activity in the next three months. Completing a very favourable picture, companies also grew more confident about the outlook for the broader Irish economy. The survey points to another step-up rather than any sea-change in overall business conditions of late. However, the upturn continues to spread more widely across sectors and firms, underpinning confidence that it will continue and strengthen further.  Commenting on the results, Chartered Accountants Ireland Chief Executive Pat Costello said: “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. 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 ten see ongoing declines in output. So, while the survey points towards a very solid upturn, it’s not suggesting the boom is back.” Austin Hughes, Chief Economist, KBC Bank Ireland, who carried out the analysis, said:  “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.”   Mr Costello also noted: “With business activity growing and set to increase, more companies have continued to boost new hiring. It remains the case that improving demand conditions are the key influence on employment growth but the survey also suggests that in some areas it has become somewhat more difficult to find suitably qualified job candidates.  One in five companies cite this development, about three times the number that found it easier to make new hires of late.” Mr Hughes also commented: “The survey suggests political uncertainty ahead of the next Irish general election is not a major concern for business at present. Responses to the survey suggest little concern about any change in overseas perceptions but some companies in construction and consumer focussed activities may feel such uncertainty could cause households and firms to postpone some spending and thereby dampen domestic demand. So, the looming election is seen as a potential distraction rather than a potential disaster.”    The KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey reflects the view of chartered accountants working in senior positions (CEOs, MDs and FDs) in Ireland’s leading companies. The Spring 2015 survey was conducted between 18th and 25th April and the results presented are based on 354 completed responses.   The full survey report is available here.   For further information contact: Austin Hughes, Chief Economist, KBC Bank Ireland          T: 01 664 6889 / 087-6696972 Brendan O’Hora, Director, Communications and Marketing, Chartered Accountants Ireland                       T: 01 6377298 / 086-2432428 Mark Leech, Gibney Communications T: 01 661 0402 / 087-9053679

Jul 05, 2015