Senior executives feel relatively upbeat about the prospects for their own firms, but are becoming more concerned about the outlook for the overall economy, a survey has found.

In the latest IIB Bank/Chartered Accountants Business Sentiment Survey, one in two Irish firms reports an increase in business activity in the past three months, with an even higher proportion - 56 per cent - believing things will pick up further in the coming three months.

Only 19 per cent of those questioned say their level of business activity had declined in the preceding three months, while 12 per cent say they expect conditions to decline in the coming three months.

However, when questioned about their feelings in relation to the broader economy, 49 per cent of firms say they are less optimistic than they were three months ago, compared with only 10 per cent who are more optimistic.

IIB Bank chief economist Austin Hughes yesterday reported no evidence showing a dramatic step change in the Irish economy.

He said the survey's results were consistent with solid economic growth. "We are not seeing any signs that the Irish economy is coming apart at the seams," Mr Hughes said.

However, he did admit there was a sense of unease about the broader economy, which was being felt by some companies, particularly in the areas of construction and property.

Still, the report also shows that only 4 per cent of firms outside of the property sector expect any substantial impact from the weaker housing market.

"A clear message coming out of the survey is that a building sector slowdown doesn't automatically translate into a dramatically weaker environment for the bulk of Irish businesses," commented John Reynolds, director at IIB Bank.

The main threat cited by the firms is rising costs, more precisely the cost of labour.

Elsewhere, the study finds the impact of the recent turmoil in the financial markets on companies was varied.

Some 39 per cent of those surveyed said the main risk comes from movements in interest rates, while 32 per cent cite exchange rate fluctuations and 20 per cent saying the volatility posed no material threat.

The euro rose to yet another record high yesterday before retreating, adding to the woes of Irish exporters.

About 460 companies responded to the questions in the survey which had been conducted between August 28th and September 7th.