IBEC, the group that represents Irish business, today published its latest Business Sentiment Survey for Q2 2013, which reveals a significant jump in confidence in the domestic sector. The gap in confidence between exporting and non-exporting companies has also narrowed. While the domestic economy has disappointed in the first half of the year, the next six months should see an improvement. This is good news for job prospects, given that so many companies operate primarily in the Irish market (see attached pdf for full details and extended commentary).
IBEC Chief Economist Fergal O’Brien said: “To support the recovery, the government should abandon plans to increase taxes in the upcoming budget. The economy and workers are already taxed enough. Any further rises would undermine job creation and make taking up a job less attractive.
The most dramatic change in business sentiment over the quarter took place among non-exporting companies; the current conditions index climbed to +17 from +3 in the previous quarter, while the three-month outlook improved to +19 from +10. One of the most encouraging features of the survey this quarter is the index for domestic sales, which climbed to a new series high of +10, up from +7 in the previous quarter. The sales outlook has now improved for four consecutive quarters and the indicator has been in positive territory for two consecutive quarters. Moreover, the recovery in sentiment has been fairly broad based, with both services and manufacturing sectors reporting greater optimism. The survey shows that fewer companies operating in the domestic market now plan to reduce staff, while 27% of exporters plan to take on new staff in the next three months.
The three-month outlook across all sectors climbed into positive territory for the first time in the history of the series, recording a reading of +2; up from -4 in the previous quarter and -14 this time last year (Q2 2012). Managers’ confidence in the prospects for their own business improved for both the current conditions index (+23, up from +19 in the previous quarter) and the three-month outlook (+26, up from +23 in the first quarter of the year). Exporters’ confidence remains at a high level.
Fergal O’Brien continued: “At last we are seeing firm signs of a domestic recovery. While the environment remains challenging, companies are looking to the future with a increasing sense of optimism. Over recent months we have started to see the economy re-balance, with the domestic sector contributing to growth. The survey suggests this trend will continue.
“It is vital that tentative signs of a domestic recovery are not undermined by tax increases. Any further tax hikes. would take money out of the economy, make work less attractive and undermine the ability of companies to invest and create new jobs.”