Wednesday, November 16, 2022

Business growth in Ireland is starting to slow as rising costs pile pressure on the economy, a new survey shows.

The latest InterTradeIreland business monitor reveals that while sales and profits at Irish firms remain relatively buoyant, quarter-on-quarter a pattern of slowing growth is emerging.

Energy and the rising costs of other overheads are the overwhelming concerns for small to medium-sized enterprises. The survey shows the impact has been particularly acute for the manufacturing industry with over 20 per cent now indicating they are contracting.

However, no sector is immune – over a fifth of businesses expect their sales to decrease in the next six months. This jumps to 41 per cent of companies in the leisure, hotel and catering sectors.

Martin Robinson, InterTradeIreland’s director of strategy, said the latest business monitor showed the impact of uncertainty in the wider economy.

“The road ahead looks to have a number of caution signs for business,” he said. “While the majority of firms that we speak to are in a stable position, the number in growth mode has dropped to just over a third, compared to 41 per cent for the same period last year.”

He added: “Our data shows us that 90 per cent of firms have experienced a significant increase in their energy costs, and that is feeding through to nearly half experiencing a large increase in supplier costs, while 44 per cent have experienced a substantial increase in transport costs.”

“In terms of Brexit, 27 per cent of firms have reported it as an issue this quarter, compared to 35 per cent of businesses in the previous quarter. Half of firms report that they have adapted in full or to a large extent to the changes brought about by Brexit.”

According to the survey, 73 per cent of businesses have passed on price rises to their customers in the last 12 months and profitability remains stable. Firms are also reporting that cost increases have not as yet impacted business and consumer confidence quarter-on-quarter.

However it remains to be seen what will happen if firms continue to pass on price rises, as nine out of 10 firms expect the rising costs of doing business to persist over the next 12 months.

The survey of 750 business managers across Ireland and Northern Ireland was conducted by telephone between September 14th-October 14th.

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