IBEC, the Irish business lobby group, in its
quarterly business sentiment survey released today, shows what it terms a
promising improvement in business sentiment in the first quarter of 2011.
While the overall index improved to -23 from -32 in Q4, manager's assessment of
the current conditions of their own business only slightly improved to +15 in Q1
2011 from +13 in Q4 2010. However, perceptions about the outlook in three month's time
jumped to+19 from +7 in the previous quarter.
The number of firms polled was 400.
IBEC chief economist Fergal O'Brien said: "Our members
are now much more positive about both their current business conditions and the
outlook for their businesses over the coming three months. The three-month
outlook strengthened from +7 in the final quarter of last year to +19 in the
current quarter. Understandably, given ongoing concerns around public finances
and banking, the majority of businesses remain less confident in relation to the
wider economic environment. The overall business confidence indicator remained
negative at -23 in Q1, but this was an improvement from -32 in the final quarter
of last year.
"It is clear that, despite the turbulent external environment, businesses
trading from Ireland have been able to sustain a relatively robust recovery.
Exporting companies are predominantly positive in their outlook with almost
two-thirds expecting their export sales to grow over the coming three months.
The position of domestic business is clearly not as strong, but it has
strengthened sharply from -12 in Q4 of last year to +1 in the current quarter.
"Although negative ratings continue to outweigh positives, the improvement in
forward-looking sentiment is the strongest proof yet that the IMF/EU loan deal
agreement and the prospect of stable government have helped stabilise companies'
perceptions about the economy.
"Encouragingly, expectations about domestic sales improved in Q1, jumping to +1
from -12 in Q4 2010. The split between companies expecting sales to decrease,
increase or remain stable is now roughly even.
"One of the major positives in the survey findings is that job prospects are
improving significantly. Manufacturing businesses are hiring again and the
overall employment index has improved from -13 to -3. This provides some hope
for a better labour market situation as the year progresses. However, we will
need further observations to see whether the upturn proves sustainable; the
index had briefly turned positive in Q1 2010 before sliding back into negative
territory for the remainder of the year.
"The onus on the new Government is to get to work quickly and put in place a
coherent job strategy. Their task now is to replicate the positive news on the
export front with sustainable growth in the domestic sector."