Irish businesses are more optimistic than they were in June, and more upbeat than most of their Northern European neighbours, the latest Barometer Survey from professional services firm Azets shows.
The new survey found strong levels of optimism is the construction and manufacturing sectors, though firms here were also concerned about economic uncertainty and talent retention.
Azets said that Irish respondents rated their economic prospects at 6.5 out of ten, up from the 6.1 recorded in June of this year.
Firms in the construction and manufacturing sectors were the most optimistic, scoring their economic prospects at 7.1 out of 10.
Azets said the positive sentiment in the construction sector is particularly significant and reflects the continued high demand for homebuilding and infrastructure development to support the country’s growing population.
The finance sector has the third highest level of optimism at 6.7 out of 10, it noted.
The survey also shows a continued correlation between business size and confidence, with large and medium businesses employing 250 employees of more (7 out of 10) in a stronger relative position to their peers.
Micro businesses (those with up to employees) have the lowest levels of financial confidence, scoring 5.6 out of 10, indicating that concerns over the high cost of doing business is having a significant impact on these firms.
Its findings also reveal that economic uncertainty is the top concern for Irish businesses, scored at 5.7 out of 10. This is followed by concerns around talent recruitment and retention (5.6) which remain elevated as firms navigate a tight labour market.
Geopolitical uncertainty (5.6) and competition (5.6) also rank highly on the risk outlook for firms as shifts accelerate in international industrial policy.
Azets said that despite slowing levels of inflation, elevated costs continue to have a major impact on businesses. 47% of businesses have increased wages in response to rising costs, while 43% of firms have passed costs directly on to customers in the form of higher prices.
Neil Hughes, CEO of Azets Ireland, said the latest Barometer provides an important insight into the attitudes and actions of Irish businesses as they navigate a challenging business landscape.
“It’s clear from our findings that firms are largely optimistic about the Irish economy and their future growth potential. This reflects the continued strong performance and prospects for Irish businesses relative to their peers in the Nordics and UK,” Mr Hughes said.
“With soaring levels of homebuilding in Ireland and recovering levels of global demand, it is not unsurprising to see the high degree of confidence specifically among firms in the construction and manufacturing sectors,” he added.
But he noted that the growth trajectory for many firms is not without its challenges.
“Given rising geopolitical instability and high business costs, economic uncertainty remains a top concern for many businesses. Firms should continue to expect the unexpected over the coming months. From phased debt repayments to the introduction of auto-enrolment, the cost of doing business continues to rise for many firms and effective planning will be needed to thrive and grow into the future,” he stated.