Accountant survey reveals optimism over credit access
MOST IRISH companies believe the establishment of the National Asset Management Agency (Nama) will have a positive – albeit modest – impact on credit availability, new research has found.
The Spring 2010 KBC Bank/Chartered Accountants Ireland Business Sentiment Survey also found that one in five businesses experienced a deterioration in credit availability in the first quarter of 2010.
Furthermore, two-thirds of businesses interviewed have reduced pay levels in recent years, with an average pay cut of 13 per cent imposed on staff.
On a positive note, the vast majority of businesses do not intend to cut pay levels further this year. Although significantly more firms reduced rather than grew their workforce during the first three months of 2010, the pace of job loss appears to have eased.
The survey, which received 353 responses from chartered accountants holding senior positions in Ireland’s leading companies, identified a number of factors that point towards a stabilisation in business activity.
More than one-quarter of respondents reported an increase in business volumes in the first quarter. This is the strongest reading in two years, and implies an “easing in pressures” facing companies, KBC chief economist Austin Hughes said.
In addition, 36 per cent of firms anticipate stronger activity levels over the coming quarter, compared to 25 per cent which envisage a weakening.
“The spring 2010 survey seems to confirm that the worst is over for the Irish economy, even if there are few signs of any dramatic improvement,” Mr Hughes said. Some sectors appear to be recovering more quickly than others, however.
For example, manufacturing businesses and firms operating in the business-to-business sector have reported stronger-than-average results. Unsurprisingly, construction and consumer-focused firms reported the weakest activity levels.
The key drivers of improved business activity levels appear to be coming from outside the domestic economy, Mr Hughes said, which explains the improvement in the manufacturing sector.
“In contrast, weakness in areas such as construction and consumer spending looks set to be a drag on Irish economic performance for some time to come.”