Business sentiment hits eight-year high as services and manufacturing rise
Irish business sentiment has reached its highest levels in eight years as confidence in the economy continues to improve, according to a new study.
Almost two-thirds of companies surveyed for the KBC Bank Ireland/ Chartered Accountants Ireland Business Sentiment Index reported an increase in business activity for the first quarter of the year while 27pc reported no change.
The results for the first quarter of the year were the strongest recorded since the inception of the survey eight and a half years ago. Respondents were also positive on the wider state of the country, with 70pc feeling optimistic while just 3pc were pessimistic.
However 10pc of companies did record a dip in their level of business over the three month period. This was up from 7pc the previous quarter.
The main areas in which weaker conditions were identified were the property and consumer-focused industries. This was picked up on in the report, which noted that "the turn in consumer spending is still quite uneven".
KBC Bank Ireland's chief economist, Austin Hughes, cautioned businesses not to get carried away with the scale of the recovery.
"What we are seeing is a solid step up, rather than a soaring, of output. The idea that everything is absolutely wonderful is not true," he said.
"Firms cited several concerns, with one in six saying that they had issues with inadequate demand while others are concerned about intense competition. Demand is still a bit patchy and domestic spending is still slow in areas, this is a recovery that needs work."
Chartered Accountants Ireland chief executive Pat Costello added: "The business sentiment index emphasises that momentum is building steadily and spreading across sectors but it also cautions against exaggerating the scale of the upturn." The news came as both the manufacturing and services sectors yesterday reported increases in activity.
According to the Central Statistics Office, manufacturers grew production by 2.8pc in March compared to the month before, with year-on-year production up 45pc for the month.
Meanwhile the Investec Purchasing Managers' Index of activity in services showed the sector continues to expand, although growth is slowing.
The PMI dipped from 60.6 from 60.9 in March, although this is still well above the 50-point line that separates growth from contraction.