Latest InterTradeIreland Business Monitor Reveals Divergence in Northern Ireland and Republic of Ireland Business Performance
• 84% of companies across the island either stable or growing
• 41% of firms in Ireland are increasing sales compared to 33% in Northern Ireland
• Majority of companies believe no negative impact from National Living Wage Introduction
• Cash flow topping list of key challenges for business (11%)
• 6% of companies concerned about energy costs compared to 15% in Q3 2014
The latest Quarterly Business Monitor Report (July – September 2015) released today by InterTradeIreland shows that the economy is continuing to grow. All sectors are performing well but the professional services sector is taking the lead with 50% of businesses expanding and 95% stable or expanding.
In total, growth is still being driven by less than half of all firms (42%) with many companies reporting considerable spare capacity and less than one in three (31%) reporting to be working at full capacity.
The Business Monitor has also revealed there is now a clear divergence emerging in sales performance and employment numbers with Ireland faring better in both areas. Although relatively close in the final months of 2012, there is now an 8% difference in businesses increasing sales in the last quarter (41% vs 33%) which is also reflected in the number of businesses expanding employment levels with 12% in Ireland and 8% in Northern Ireland.
Aidan Gough, Strategy and Policy Director at InterTradeIreland said: “The divergence in performance is not unexpected and reflects structural differences in the two economies that differentiate their ability to take advantage of economic tailwinds.’’
‘’The economic upturn is also reflected in the key challenges which businesses now say they are facing. Normal business pressures are now at the fore of issues facing firms with cash flow at 11%, new competition, late payments and internal costs all at 9%. Concerns over energy costs have dropped from 15% this time last year to 6% and business costs in general have decreased though remain significant for the manufacturing sector,’’ he added.
Encouragingly, 33% of companies report that they plan to increase staff salaries with Northern Ireland (35%) leading the way from Ireland (32%). Large industry is ahead of the pack with 51% of firms of more than 50 employees planning to increase wages and 38% of manufacturing companies following suit.
This bodes well for the introduction of the National Living Wage in April 2016. The majority of firms (80%), with the exception of the hospitality industry, are not expecting this to have any negative impact.
Aidan continued: “It is interesting to note that many of the issues currently being raised by businesses are now coming from market pressures. Increasing competition, managing cash flow and internal costs are now the key challenges for businesses. With low oil prices, energy costs have moved from prime position. The hospitality sector is, however, continuing to feel the strain of energy prices and is concerned about the impact of the Living National Wage next year. However, cash flow issues will need to be addressed before salaries can be raised across the board.”
InterTradeIreland’s quarterly Business Monitor survey is the largest and most comprehensive business survey on the island and is based on the views of more than 750 business managers across Northern Ireland and Ireland.
It differs from other surveys in that it is seen to be the ‘voice of local businesses’ feeding directly from telephone interviews conducted with a robust sample of firms of all sizes across a range of sectors to track all-island economic indicators such as sales, employment, business outlook and other specific topical research areas on a quarter by quarter basis.
For more information on InterTradeIreland and their business support programmes, please visit www.intertradeireland.com . A copy of the 2015 Q3 InterTradeIreland Business Monitor Executive Summary can be viewed at: www.intertradeireland.com/researchandpublications/business_monitor/