Here we go again, assessing the findings of another survey which suggests a less than sunny disposition among the ‘businessistas’ of Irish life.
The latest pamphlet through the Munster Express letter box – the IIB Bank/ICAI Summer Business Sentiment Survey revealed growing concerns about the economy.
IIB Bank Chief Economist Austin Hughes, who carried out the research, believes that credit conditions were emerging as a major problem for Irish businesses.
“The credit crunch is beginning to exert a significant impact on Irish business conditions,” he said.
“Only one in seven companies reports no effect while one in four indicated that the credit crunch was having a substantial impact on their activities. Not surprisingly, firms in areas such as construction and other property activities reported a particularly large impact.”
Added Mr Hughes: “However, companies in business and consumer services also reported significant effects. Indeed, only public sector and Manufacturing firms reported relatively little impact.”
He suggested that such problems were being exacerbated by the emerging slowdown in activity. “The consequences of the credit crunch on the broader Irish economy are likely to be amplified considerably by a weakening in cash flows for many businesses as a result of softer sales and notably higher costs,” he said.
Poring through the survey’s findings, Mr Hughes identified how firms are being ‘squeezed’ by slower sales and falling margins.
“Rising costs remain a key concern for Irish business,” he said. “Three out of four firms reported their costs increased in the past three months and a similar number expect further increases in the coming quarter.
“The main effect is a sharp squeeze on margins as only one in 20 companies expect to raise their selling prices sufficiently to largely offset higher costs. While one in four feel they will be completely unable to raise prices.”
He added that a ‘one slump hits all’ pigeon-holing of the current picture didn’t provide an accurate depiction of the economic condition.
“Even in areas such as consumer spending, the survey points towards pockets of strength that suggest the economy as a whole is slowing rather than collapsing,” he said.
“Moreover, nearly half of those firms responding suggest that their own companies’ fortunes are not closely linked to those of the broader Irish economy.
“Although business conditions are set to remain difficult in coming months, companies are taking early and often painful decisions to ensure they can continue to compete.’