Business leaders remain confident of increased sales and employment

Irish business leaders continue to be very confident with the majority looking for increases in sales, employment and economic growth, according to the latest Bank of Ireland business confidence survey. Four in every five chief executives are looking to increase their turnover during the coming year. This is the highest level of confidence since the first survey was carried out in August 1996. Only 5 per cent said turnover will fall.

Exporters share the euphoria, with two out of three believing there will be an increase in the volume of exports. Just 27 per cent expect exports to remain the same, while 6 per cent expect a decline. The survey notes that, with the strength of sterling predicted to continue, high levels of confidence among exporters shown in the survey should be maintained. The survey, carried out by Irish Marketing Surveys, and published by the Bank of Ireland, in association with The Irish Times, shows some softening in attitudes regarding growth in the Irish economy. In the previous survey, two in every three corporate leaders expected national growth to increase but in the latest survey, this optimism had fallen by nine percentage points and now stands at 57 per cent.

This decline, the survey explains, is counterbalanced by an apparent perception that economic growth may have plateaued with over one-third of senior executives suggesting that it will stay the same during the coming year. It it noted that very few (5 per cent) anticipate a decline in growth, "a confidence in itself in view of the incredibly strong performance of the Irish economy in recent times".

Businesses are more confident about employment prospects than they were in February. In May, 43 per cent anticipated an increase in their workforce, up six percentage points on February. Also, the proportion envisaging a decline has changed just marginally at 13 per cent. Over half taking part in the survey envisage price stability for their goods or services. However, the proportion anticipating price increases is at a much lower level than in February and the proportion who believe their prices will fall has increased from one in seven to almost one in five. "Indeed, we must go back to this time last year, or earlier, to find similarly modest predictions of price increases," it says.

Business leaders continue to express confidence that EMU will benefit the economy. The numbers believing that the economic environment will improve has risen from 52 per cent to 63 per cent.

While the proportion who maintain that the overall impact will be neutral has not changed much since February, negative attitudes appear to be very much on the wane, with the share of those who believe that EMU will be damaging has fallen from 13 per cent to 5 per cent.

Although most in the survey argue that the economy will benefit, business leaders are somewhat more circumspect when it comes to their own companies. Just two in five believe it will have a positive impact, while half feel that EMU will have no effect on their business.

However, opinion "is certainly moving towards a more favourable perception, with optimists now outweighing pessimists by a substantial nine to one", according to the survey. The findings were based on the responses from 164 chief executives, or heads of finance, drawn from the largest companies, representing a cross section of the main business sectors.