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

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