Cross-border economies are growing
The latest InterTradeIreland Business Monitor Report for Quarter three (July – September 2015) 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.
The report also revealed that there is now a clear divergence emerging in sales performance and employment numbers between both jurisdictions, with Ireland faring better in both areas. This is not unexpected and reflects structural differences in the two economies that differentiate their ability to take advantage of economic tailwinds.
Although relatively close in the final months of 2012, there is now an 8% difference in businesses increasing sales in the last quarter (Ireland at 41% vs Northern Ireland at 33%) which is also reflected in the number of businesses expanding employment levels with 12% in Ireland and 8% in Northern Ireland.
Capacity in firms high
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.
Evidence of economic improvements
The economic upturn is 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.
Staff salaries increase
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. The hospitality sector continues 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 Business Monitor
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/