IRISH BUSINESSES are optimistic about the economic outlook for the first time in two years, according to a quarterly survey.
The business sentiment survey, issued by KBC Bank and Chartered Accountants Ireland (CAI) yesterday, indicates that, while business conditions are still tough, they have improved since the start of 2009.
The survey showed that business conditions continued to weaken in the third quarter of 2009, but indicated that the pace of decline was much slower than in the past four quarters.
While 49 per cent of companies reported weakening business conditions, 22 per cent reported stronger levels in the past 12 months.
Some 27 per cent of businesses envisage an increase in business over the next three months, while 35 per cent expect a further decline.
However, the negative eight-point balance is by far the smallest recorded in the past five such surveys.
Although job cuts remain widespread, the pace of job losses appears to be easing. The survey points to slightly fewer lay-offs and a rise in hiring among employers. The lowest job prospects are still within the construction sector, with two-thirds of businesses signalling more job losses.
Prices continue to fall as indicated by the 57 per cent of businesses which reported a further fall in costs from the summer survey.
Some 62 per cent were in favour of Nama, with two out of three anticipating that lending would improve as a result of the agency.
Commenting on the survey Rónán O’Brien, communications director at CAI, said there was a growing sense amongst businesses that “the worst may be behind us”.
He noted that although business activity had weakened further the drop was not nearly as severe as in recent surveys, adding that modest improvement could be expected in the next three months.
“While this is encouraging the broad message of the survey is that any looming recovery will be modest and patchy,” he said.
Austin Hughes, chief economist of KBC Bank, added that although businesses remained nervous “this positive reading is a small but potentially important first step towards an improving economy”.
