CONFIDENCE AMONG Irish manufacturers has hit its highest level in almost three years, but most companies still expect employment to decline further, according to a survey by KPMG.
Over 11,000 manufacturers and service providers globally were questioned for KPMG’s International Business Outlook survey.
It found that business confidence among manufacturers in Ireland has grown 38 per cent – its highest level since January 2007 – but is still below international standards.
Despite renewed confidence about future business conditions, Irish manufacturers remain pessimistic about profitability. According to KPMG’s head of advisory, David Kennedy, this is due to continuing concerns about Ireland’s high costs, and sliding output prices.
‘‘[It] boils down to competitiveness. Ireland has paid a heavy price for the ‘Celtic Tiger’ years which saw pay levels increase considerably ahead of productivity. Expectations of continued declining output prices – especially when set against increasing input prices in manufacturing – serve to confirm that further correction is needed.’’
Similarly, it seems that the boost in business confidence among manufacturers will not automatically lead to new jobs being created, with most Irish respondents expecting employment to decline further in the next 12 months.
In contrast, Irish companies in the service sector are more optimistic, with service providers expecting employment and profitability to rise over the next 12 months.
The survey found that the BRIC counties – Brazil, Russia, India and China – and the US were the most optimistic about an imminent economic recovery, although confidence had weakened in Japan.
