Irish business sentiment weakened notably in the first quarter of 2016 from the nine-year high recorded in the previous quarter, according to the KBC Bank Ireland/Chartered Accountants Ireland Business Sentiment Survey.
This has resulted from some easing in the pace of output growth and a notably increased level of uncertainty, which weighed on the mood of the corporate sector in Ireland.
The survey also suggests there has been a clear easing in the strength and spread of Irish economic growth since the turn of the year.
The KBC Bank/Chartered Accountants Ireland business sentiment index fell to 117.7 in the first quarter of 2016 from 131.1 in the final three months of 2015.
While the previous reading was the highest in the nine years of the survey, the latest is the weakest since the autumn of 2013.
Irish-based firms were also asked to indicate what they saw as the biggest risk facing their businesses at present. Unsurprisingly, weaker global demand emerged as the most significant threat and was cited by 49% of respondents.
4% of respondents indicated the prospect of Brexit had caused them to postpone, scale back or cancel activities while 1% of firms had increased activities.
Chartered Accountants Ireland chief executive Pat Costello said: “The sentiment survey hints at a clear easing in the pace of growth in business activity levels across Irish-based firms in early 2016. While output and employment are still increasing at a healthy rate, the scale and spread of those gains is altogether more modest than the trend seen through the past year or two. This is associated with a notably more cautious assessment of the general economic outlook as an increasingly uncertain global environment weighs on business sentiment.”
Austin Hughes, chief economist, KBC Bank Ireland, added: “Although activity and jobs are growing, Irish companies report a clear increase in downside risks to their business volumes of late. A weakening of global growth is widely seen as the main threat but the possibility of Brexit and domestic political stability are also regarded as key issues. The range of concerns raised in the survey highlights the variety of clouds in the economic sky at present and the diversity of the business circumstances of individual companies.”