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Irish Businesses Remain More Confident Than Global Average – S&P Global Ireland | Checkout

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Irish business confidence in output growth remains stronger than global average, according to the S&P Global Ireland Business Outlook survey for June.

Sentiment has eased slightly since February, but Ireland held the third-highest sentiment – tied with Brazil – among the 12 nations from which comparable data was available.

The UK and US were more optimistic.

Headline net balance activity combined in the manufacturing and service sectors fell slightly to +39% in June, down from +43% in February.

Overall easing in the 12-month outlook since early 2024 reflected weaker sentiment in both the services (+42%) and manufacturing (+37%) sectors.

Irish businesses expectations were the second-strongest in Europe at +39%, behind the UK at +44%.

Both were well above the Eurozone average of +20% in June, though this was weighed down by Germany (+14%) and France (+13%).

Opportunities

The areas expected to drive business opportunities in June were new product ranges, tourism, international demand, higher sustainability budgets, digitisation, artificial intelligence and increased consumer spending as the cost of living eases.

However, a number of threats may also impact businesses, including high labour costs, staff shortages and retention, supply chain vulnerabilities, geopolitical tensions, stubbornly high interest rates, fuel and shipping costs, political uncertainty in Europe and the US and resurgent inflation.

The staff costs net balance in Ireland remained elevated at +64% in June, and was the second-highest globally behind the UK.

Non-staff costs moved up from February’s three-year low up to +44%, well above the long-run trend level of +29%, but below the record high of +66% recorded two years ago.

Though experts expect cost pressures to remain high, Irish firms were optimistic about overall profitability in June with a net balance of +23%.

Employment

Irish firms were the second-most optimistic about hiring growth among the 12 nations, behind only Russia.

Employment outlook was the softest since late-2020, but the net balance of +22% was above the average Eurozone figure of +9%.

Manufacturers were slightly ahead of service providers on employment, at +23% and +21%, respectively.

Within Europe, Ireland had a stronger investment outlook than the UK, France and Germany, but a weaker outlook than Italy and Spain.

The forecast for research and development was only marginally positive at +3% – its lowest level in four years.

Inflation And Profits

Irish private sector firms expect wage pressures to remain elevated over the next 12 months, leading to higher output prices.

A net balance of +64% of Irish private sector companies projected a rise in wages, down from +66% in February but still above the historic average of +59%.

The Irish figure was the second-highest in the survey, above the average of +36% and below only the UK, which held +66%.

Irish companies intend to pass increased costs to customers over the next 12 months.

The net balance of firms predicting price hikes fell to +32% – the lowest in a year but above the long-run trend level of +24%.

Both manufacturers and service providers expect profit growth in the coming year, with the overall net balance little changed at +23%, still below the long-run trend level due to still-elevated cost pressures.

‘More Upbeat Than Most’

Speaking about the results, the economics director at S&P Global Market Intelligence Trevor Balchin said, “Irish private sector firms remained more upbeat than most of their global counterparts in the June survey.

“The outlook for the next 12 months eased slightly but was again stronger than those for the four largest Eurozone economies and among the highest globally behind the UK and the US.

“Expectations for jobs and wages remain comparatively high in Ireland, though firms widely report difficulty retaining staff and finding suitably skilled candidates.

“They recognise the importance of adopting new technologies such as AI, which is seen as both an opportunity and a potential threat to business.

“Price pressures remain elevated and companies view stubbornly high interest rates and the spectre of resurgent inflation as holding back a rebound in growth.

“Political uncertainty in Europe – notably France – the US and UK is also clouding the outlook somewhat.”

Read More: Cold June Prompts UK Consumers To Cut Back On Spending

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