Irish business activity strengthened in the final months of this year with the result that employment growth seems to have turned positive, according to the Winter 2012 KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Survey.
However, firms remain cautious about the broader economic outlook and, as a result, are hesitant to ramp up spending and hiring in 2013.
The survey also analysed businesses’ attitudes to Budget 2013 with the results showing that Irish business sees the Budget as posing some threats for the year ahead.
“The improvement in business activity levels seen in the final months of 2012 is encouraging in several respects,” said Austin Slattery, president, Chartered Accountants Ireland.
“Probably the most notable finding is that the balance between those companies reporting increased business and those reporting weaker conditions in the past three months remains positive. Indeed this balance is now at its strongest level in five years. It should be emphasised that the survey isn’t suggesting any dramatic pick up in business conditions but it does seem that a gradual recovery is taking hold.”
Austin Hughes, chief economist, KBC Bank Ireland added: “The strengthening in activity in late 2012 has translated into an increase in new hiring and a reduction in lay offs of late.
“The emerging improvement in the Irish jobs market is modest but this is still very good news. Firms remain cautious and are only filling new positions on the basis of clear needs rather than on expectations of stronger future activity. These results and the relatively modest gains in activity anticipated in early 2013 imply recovery is still quite hesitant but that is probably as much as can be expected in the current environment.
“The survey suggests that Irish business sees Budget 2013 as posing some risks for the Irish economy in the year ahead. Three times as many companies felt the Budget erred in an excessive focus on reducing the deficit as thought it was too focused on avoiding damage to short-term growth. Concerns about a fragile Irish economy also seem to inform answers given to another question that found 51pc of companies think a weak Irish economy will cause tax targets to be missed in 2013 while only 15pc think they will be met.”