Business confidence rebounded sharply in February amid a pickup in hiring intentions among employers and rising expectation that inflationary pressures will continue to cool off as the year progresses.
Based on a survey of some 8,000 firms globally, 600 of which are based in Ireland, Accenture and S&P Global’s latest business outlook report indicates that Ireland’s private sector was the most confident in the world last month, recovering from its lowest recorded rate in the two previous surveys.
With supply chain disruption dissipating and the impact of elevated energy prices having weakened in recent months, a large proportion of respondents said they expect cost pressures to ease throughout the year.
Businesses are still expecting both staff and non-staff costs to rise this year although the readings dipped to two-year lows in February.
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Accenture and S&P said that in both cases, inflationary pressures are expected to be higher in the services sector than in manufacturing.
The survey indicates that softer inflation forecasts coupled with expectations for a pickup in demand is emboldening profit forecasts for 2023 with businesses more optimistic than they have been in 12 months about profitability.
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Meanwhile, the data also indicates that firms have increased their hiring expectations for this year. While the reading was weaker in February than in previous surveys from late 2021 and the start of 2022, Accenture said the Irish reading was the strongest globally and “historically elevated”.
Overall, they said the survey indicates a “considerable improvement” in Irish headline confidence, which was stronger than in any of the 12 countries surveyed.
The February reading was also the highest in a year and “supported by significant upwards revisions to growth forecast in both the manufacturing and service sectors”, they said.
“After a challenging few years, it’s encouraging to see confidence rising,” said Hilary O’Meara, country managing director at Accenture in Ireland.
“While it is still a tough environment for businesses, with many remaining cautious about the effects of the ongoing war in Ukraine, higher energy bills, and global recession risks, businesses are clearly more optimistic about the wider economy. There are many opportunities for growth as price and supply pressures ease, and we’re very encouraged that so many businesses in Ireland are looking to expand into new markets, develop new products and improve productivity.”
