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Sentiment Steady Through Q2

Business sentiment was broadly steady in Q2 2014, according to a July survey of 400 chartered accountants working in senior positions in Ireland's leading companies.

The Summer 2014 KBC Bank Ireland / Chartered Accountants Ireland Business Sentiment Survey concludes:
•      Current reading suggests further if more modest GDP gains through this year.

•      Firms report increased activity and hiring but trend in confidence marginally softer.

•      Business growth stable and solid as 'catch-up' in domestic spending now emerging.

•      Visibility on outlook reasonable but uncertainty still affects domestic focussed firms.

•      Inflation absent as lack of pricing power sees 70% of firms report flat or falling prices.

Commenting on the results, Pat Costello, Chief Executive, Chartered Accountants Ireland noted: “Respondents reported steady rather than spectacular increases in output in mid-2014 but this should be seen as the continuation of very healthy growth rather than any pointer to weaker conditions. The survey signals that hiring is now at its strongest since mid-2007 and is particularly encouraging in this regard.”

KBC economist Austin Hughes added: “The marginal decline in the business sentiment index may be disappointing but it isn't at all surprising given the dramatic improvement reported in the second half of last year.

"The survey is designed to capture changes in business conditions. So these results point to step gains of late rather than any seismic change in activity levels. In turn, this reflects the reality of a recovery that is healthy but far from a return to the boom.”

The survey found that the majority of companies focussed on the domestic economy said uncertainty was affecting their business decisions. Only one in three firms reported rising costs in the past three months and an even smaller number said they were increasing the prices of the goods and services they sell.

“With 70% of companies reporting flat or falling selling prices, it seems a lack of pricing power is a key feature of the business environment. In turn, this means a low inflation environment is now deeply entrenched," said Hughes.

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