Recovery remains uneven – KBC survey

A new survey suggests that business sentiment has continued to stabilise during the first three months of 2011.

A new survey suggests that business sentiment has continued to stabilise across the economy during the first three months of 2011.
The KBC Bank/Chartered Accountants Ireland business sentiment survey indicates that the economy is ‘bouncing along the bottom’. It says this has been the case for some time and could continue because the broadly based positive momentum typically found in a recovery phase is missing.
The Spring survey shows that conditions continue to vary widely between sectors. It says that the manufacturing industry saw the strongest activity trends. Firms in the food sector also reported a strongly positive balance, but there were slightly fewer firms reporting gains and slightly more companies reporting weakness compared to the previous three month period.
The business services area also saw a smaller overall positive balance, while the negative balance in the construction sector was sharply lower compared to the last three months of 2010.
KBC said that 73% of Irish companies surveyed expect to be negatively impacted by higher European Central Bank rates due to weaker demand, higher financing costs and another hit to confidence.
Today’s survey reveals that employment levels continued to fall, but the number of firms which increased their headcount rose to the strongest level since the Winter 2007 survey with one in five firms reporting that they had added jobs in the past three months. One in four firms cut their workforce, but this is a somewhat lower figure than seen in recent surveys.
KBC said, however, that stronger expectations for future jobs growth are more prevalent in those sectors traditionally seen as less labour intensive. ‘As a result, it seems unlikely that any turnaround in Ireland’s job market will be a relatively slow and uneven process,’ the bank added.
Companies also said they regarded the new government programme as positive for Irish economic prospects, while they retained significant doubts that the 2015 deficit targets will be met

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