2015 Q4 InterTradeIreland Business Monitor
22nd February 2016
The latest quarterly InterTradeIreland Business Monitor Report (October to December 2015) released today has indicated that pressures for businesses have changed over the last quarter and are now topped by concerns typical of a growing economy with more than half of businesses citing competition and discounting by competitors (both at 54%) as a key issue for their business.
While this is not ideal for individual firms, it is a sign of a relatively healthy market. When coupled with cashflow worries at 49%, it is indicative of business conditions with low margins in a competitive market.
However, this needs to be balanced by 68% of firms reporting to be quite profitable or very profitable which can perhaps be linked to increases in business efficiency. Companies are ‘running lean’ with 77% close to or at full capacity and encouragingly this picture is fairly consistent across all company sizes and sectors. For the first time since 2013 almost 9 out of 10 (89%) firms are stable or growing although the momentum of growth is showing signs of diminishing and being replaced by stability.
Aidan Gough, Strategy and Policy Director at InterTradeIreland said; “Despite signs of a healthy marketplace, an intensely competitive market, relatively low input costs and discounting from competitors are all constraining firms’ ability to grow. Companies that are in growth mode, are characterised by their investment in innovation and exporting to new markets including the cross-border market on the island. Once again the trends are showing that businesses which export are forging ahead of those solely focussed on their home markets. 54% of companies with cross-border sales are experiencing growth compared to 30% which don’t.”
Employment has remained fairly static this quarter with most gains in those with 50 or more employees where 40% increased their workforce compared to just 5% for small or micro companies. Encouragingly 17% of companies are expecting to increase their employees over the coming months, with only 3% concerned about any shortage of skills.
Aidan continued: “With the lack of inflationary pressures in the marketplace the immediate threat of an increase in interest rates appears to have abated again for the present, we asked companies what they felt the effect would be in terms of borrowing or debt if rates were to increase in the future. Two fifths (39%) of businesses felt that there would be consequences for them with 15% of those with more than 50 employees feeling this would have a lot of impact, presumably as borrowing and leverage is higher in these firms.”