THE NUMBER of Irish firms reporting an increase in business volumes eclipsed those indicating a decline for the first time in more than 2½ years, according to an established quarterly survey.

The KBC Bank/Chartered Accountants Ireland Business Sentiment Survey found one-third of firms experienced a moderate pick-up in business during the second three months of the year.

The figure was marginally ahead of the number of businesses reporting a deterioration in trade for the first time since 2007, suggesting a gradual improvement in business conditions was under way.

The survey noted the positive readings were “not particularly strong”, nor were they being experienced by all sectors of the economy.

It was conducted in the second half of June and based on 366 responses from chartered accountants holding senior positions in Ireland’s leading companies.

It suggested that while fewer firms expected activity to decline further, most did not anticipate a major turnaround in conditions either. Some 17 per cent of respondents expect their company’s level of business to decline over the next three months, compared with 25 per cent in the previous spring survey.

However, while 35 per cent of those surveyed expected an improvement in business over the next quarter; this represented a slight decline on the 36 per cent recorded three months ago.

KBC chief economist Austin Hughes said the survey shed light “on what has become a heated debate about whether the Irish economy is in recovery mode”.

“The survey points towards a recovery but also explains why it may not feel like a recovery for many,” Mr Hughes said.

“What is happening is a gradual easing in the negative factors that depressed activity and employment in recent years. So, the ‘feel bad’ factor is fading but the ‘feel good’ factor that we normally associate with economic upturns remains largely absent.”

The survey also suggested the impact of the euro’s current weakness was not being felt evenly across Irish business. Some 40 per cent of respondents insisted currency movements were not affecting their business. While 36 per cent of firms believed a weaker euro would help their trade, as many as 23 per cent of firms regarded it as a negative.

A separate survey, released yesterday by the Small Firms Association, indicated the rate of job losses among small businesses in the Republic had slowed in the second quarter, though the prospects for job creation remained weak.