Date
29 Nov 2024Category
The Azets Barometer Survey, which polled 136 firms across Ireland in September 2024, found that Irish businesses are the second most optimistic in Northern Europe with Irish respondents rating their economic prospects at 6.5 out of ten, a 0.4 increase since the previous Azets Barometer in June 2024. This is up from the 6.1 recorded in June of this year.
The barometer reveals that firms in the construction and manufacturing sectors are the most optimistic, scoring their economic prospects at 7.1 out of 10. The positive sentiment in the construction sector is particularly significant, outperforming the international average by 1.2 points. This reflects the continued high demand for homebuilding and infrastructure development to support Ireland’s growing population. The finance sector has the third highest level of optimism at 6.7 out of 10.
Findings show that financial confidence (6.7) also remains strong among Irish businesses. Data on key growth indicators show that firms expect turnover (6.6), profit (6.5) and headcount (5.9) to grow over the coming months. Financial confidence is highest among businesses in the manufacturing sector, with businesses scoring on average 7.5 out of 10, a significant 1.2 points above their international counterparts.
There is 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 (0-9 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.
Findings show 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.
Despite slowing levels of inflation, elevated costs continue to have a major impact on businesses. Nearly half of businesses (47%) 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.
Findings reveal the disproportionate impact of inflation across certain sectors of the economy. 4 in 5 (80%) manufacturing companies have increased wages as a result of inflationary pressures. 70% of manufacturing firms have increased prices as a result of higher costs, followed by 54% of firms in the hospitality and retail sector.
Commenting on the findings from the Barometer, Neil Hughes, CEO of Azets Ireland said:
“The latest Azets 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. 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.
“However, 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.
“At Azets, we pride ourselves on our ability to understand and meet the needs of entrepreneurial, owner-managed, and family-owned businesses as they navigate the challenges ahead. We continue to expand our team of professional advisors and experts to support ambitious businesses around the country overcome obstacles and fully unlock their growth potential.”
To learn more about the latest Azets Barometer Survey, visit https://www.azets.ie/azets-barometer/.
