Q4 sentiment high with business – IBEC

IBEC, the group that represents Irish business, today published its Q4 sentiment survey, which reveals that business confidence is improving, after falling back during the middle of 2012. The outlook for exports rose significantly, and while domestic sales expectations remain modest, they are much better than this time last year (see attached pdf for full results and trends). 

IBEC Chief Economist Fergal O’Brien said: “Despite a tough budget, business is positive about the year ahead. The domestic economy is weak, but there are increasing signs of stabilisation in consumer spending and housing, while business investment in machinery and equipment is growing robustly. We still face many economic challenges, but we can look to 2013 with a renewed sense of optimism. Weak growth in Europe and a fragile domestic economy remain the big worries for 2013. Unless we see progress on both these fronts, we will not tackle the unemployment crisis.”

Key trends highlighted in the survey include:

    • The final quarter saw an improvement in CEOs’ assessment of their own businesses, both the current state and future outlook. The current conditions index rose to +15 from +10 in the previous quarter and was substantially higher than the reading of +4 recorded in Q4 2011.
    • Confidence in the overall business environment improved slightly in the final quarter of the year but remains weak, with the current conditions index at -13 and the forward-looking index at -14. Both had recorded a reading of -19 in Q3.
    • Export expectations rebounded to +33 from +12 in the third quarter and +29 at the end of 2011. The shift is driven by improved expectations across a range of sectors, but especially those where sales forecasts had softened in the middle of the year. Of the modern sectors, med-tech has consistently reported strong sales expectations. Sentiment in the ICT services and pharma sectors rebounded strongly in Q4.
    • At -3 in Q4 2012, the index for domestic sales remained unchanged on the previous quarter, and was substantially improved on the Q4 2011 reading of -17.

“Exports have slowed since the start of the year because of difficult trading conditions in Europe, but 2012 will still be a record year. The exporting sector is driving the recovery and this strong performance is set to continue in 2013. The challenge is to ensure this success is replicated in the other parts of the economy. A deal on Irish debt at a European level would help both consumer and business confidence enormously,” concluded Mr O’Brien.