Business leaders more confident on future of services sector
Published 02/08/2010 | 05:00
IRISH business leaders are more confident about the future of the services sector in their country than anywhere else in the European Union, according to a new survey by KPMG -- although confidence in the manufacturing sector is around the EU average.
Sentiment regarding Irish business activity in the services sector is running at +47.9; well ahead of the EU average (33.6) and the global average (43.9), according to KPMG's latest International Business Outlook Survey.
The latest survey results, compiled by research firm Markit Economics on behalf of KPMG, also suggest that overall expectations among the Irish business community are increasingly positive.
Sales and new business in both the services and manufacturing sectors are expected to grow over the next 12 months, with profits in the services sector poised to grow more quickly than across the EU as a whole. Marginal increases in employment are also expected in both sectors.
The latest survey, which is significantly more optimistic than the previous quarterly survey, comes at a time when many economists are also beginning to upgrade their forecasts for growth this year and next year. Almost all economists see the economy expanding next year which would be the first time since 2006 that the economy grew year on year.
"Confidence in a local recovery is partly founded on the completed transfer of the largest property loans from banks to NAMA and this has provided some increased liquidity to support targeted bank lending to the SME sector," said KPMG's David Kennedy.
"The Government's ann-ouncement of a €500m fund to support innovation has also been well received. Signs that tax receipts are now stabilising, albeit at levels below 2008, helps remove uncertainty and has driven a cautious improvement in consumer sentiment."
While most economists predict a so-called "jobless recovery" where economic growth resumes but unemployment remains high, business leaders polled by KPMG expect to take on modest numbers of staff over the next 12 months.
More business leaders in the services sector expect an increase in new business (48.3 instead of 33.1), higher profits (26.5 from 11.5) and higher employment numbers (16.8 from 6.3).
Confidence in future activity in the manufacturing sector in Ireland is currently running in line with the EU average and ahead of other economies.