Political and Economic Analysis

Irish business conditions improve as inflation cools, say CEOs

About a third of all firms reported that their businesses were growing, while many more companies said they were performing steadily

 

Trading conditions and optimism are improving for small and large Irish firms, according to two surveys that point to rising optimism among business chiefs that inflation is on the retreat.

InterTradeIreland, the agency that monitors and promotes all-Ireland economy and trade, said that profitability for many firms across the island was on the rise, as the pace of price increases slows.

About a third of all firms reported that their businesses were growing, while many more companies said they were performing steadily as they went into the new year. The agency’s survey is based on responses from 750 firms.

On profitability, almost three-quarters of the firms said they were generating earnings in 2023, the largest share since the onset of the pandemic, InterTradeIreland said.

Martin Robinson, director of strategy at the agency, said many large, small, and medium-sized firms reported they were likely to recruit more staff this year, even as the two regions North and south were running at, or close to full employment. Shortages of skilled staff persist.

“Aside from the difficulties that firms are finding in attracting the correct talent, the other top two issues reported by businesses remain energy costs and overheads,” said the agency.

“However, the Business Monitor indicates that businesses believe the speed of price rises should slow down over the next six months, as inflationary pressures ease in the wider economy.”

The survey states: “Looking ahead, 58% of companies predict their prices will remain the same, while the number of businesses saying they have increased their prices significantly has halved since the beginning of this year.”

Chief executives are largely more positive on the outlook for 2024 than they were in the previous two years as businesses adjust to challenges, according to a survey by business group Ibec.

It showed most of the 230 chief executives said costs continue to bite, putting pressure on profitability for many. More than 40% said they anticipate domestic sales will be stronger compared to the previous year, up from 34% in 2023, as some businesses shift their focus to local customers since Brexit border checks have been enforced for goods.

However, employers also predict they will slow recruitment drives. 

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