BDO is delighted to share the findings from our latest quarterly optimism index. The index, a continuous survey carried out for the last seven years, tracks business performance and the views of business leaders across Ireland.
This quarter we note Irish businesses have identified the housing crisis and Brexit as their top concerns and the most important areas for government investment. Investing in education and investing in transport infrastructure were also listed as key areas of focus by businesses.
Housing costs are most certainly feeding into the pressure on Irish businesses. It effects the ability to attract and retain quality staff, puts upward pressure on wages and contributes to competitive pressures on businesses.
The lack of available housing is a significant problem for our economy and if not addressed adequately, will impact the country’s long term competitiveness. The Index indicates that the lack of housing supply is a major concern for Irish businesses and a significant issue that is impacting day-to-day business. If businesses are to continue to grow, affordable accommodation for Ireland’s workforce needs to be provided.
The fact that it is referred to more often than Brexit may be because the outcome of Brexit remains so uncertain and businesses are waiting for concrete actions to emerge from the negotiations. The research also shows that 41% of Dublin based businesses listed the housing supply as the area they consider to be the most important for the government to focus on right now with Brexit a top priority at 24%.
The report highlights that businesses recording higher levels of business activity has dropped to its lowest since 2014 from 45% to 39% in 2018. This slowing in the growth of business activity is being driven primarily by microbusinesses.
Other key findings from the survey indicate 78% of businesses are reporting employment levels remained the same as the same quarter last year. Medium to large sized businesses are the biggest recruiters in Ireland currently, with 43% of them stating they increased their workforce compared to this quarter last year.
Most businesses are maintaining price levels with just one in five charging higher prices compared to this quarter last year. However, the proportion of firms charging lower prices is at its lowest level since before the survey began in 2011.
The survey also reports the number of businesses recording a higher operational profit compared to this time last year is down 2%, from 32% in 2017 to 30% in 2018. However, projected business activity in the next quarter is particularly strong with 46% of businesses projecting increased activity.
Optimism is up from this point last year, rising from 65.9 in 2016 to 66.4 in 2018. Businesses based in Dublin are the most optimistic at 69.6 compared to regional businesses at 64.9. Overall the survey found that businesses remain optimistic.
Ireland’s economy and businesses are in a healthy state, activity levels are significantly up from a few years ago and continue to grow albeit at a slower pace, and employment levels are holding steady.