The latest Business Monitor from InterTradeIreland indicates that the jobs challenge is likely to remain persistent, with more firms reducing their staff numbers (14pc) than increasing them (7pc) in quarter two this year.
Some 48pc of businesses describe themselves as contracting, trying to survive or winding up. This is despite some positive signs in sectors such as agriculture, hotel and leisure, and retail during the same period.
The monitor, which surveys 1,000 companies across Ireland on a quarterly basis, also reveals the downturn has hit small businesses hardest.
Nearly half (48pc) of businesses with less than 10 employees report they are winding up, contracting or simply trying to survive. This is compared to just 14pc of firms with more than 50 employees.
Companies in the hotel and leisure sector, retail and distribution have made the greatest improvement in sales over the last quarter, although this may be due in part to seasonal factors.
The sector consistently showing strongest sales performance is business services (for example legal, consultancy, and engineering design firms), faring better than others and reporting greater levels of business.
“Too many firms appear to be stuck in a rut, with nearly half of businesses contracting or in survival mode,” Aidan Gough, director of Strategy and Policy at InterTradeIreland explained. “Small firms reliant on domestic demand, in particular, are facing the most difficult challenges.”
However, for the first time in a number of quarters, we are seeing some positive signs for some business – mainly larger firms which are reporting an increase in sales performance. This is particularly evident across the agriculture sector, which may have benefited from rising food commodity prices and the recent strong cereals harvest.
“Improved performance is also evident, however, in a number of other sectors which had previously been experiencing severe trading conditions.”
90pc of companies in Ireland are micro-enterprises
Gough said the key challenge remains firmly on the smaller micro-enterprises side, with almost half of these companies under pressure to stay in business.
“Ninety per cent of all companies in Ireland are micro-enterprises, so these firms are vital to the future of this economy. Policy makers and development agencies must ensure that these companies are receiving the supports necessary to assist them to develop new opportunities and ensure longer-term sustainability and InterTradeIreland has just launched two new initiatives aimed at helping such companies take the first step on the export ladder and improve innovative capability.”
An analysis of companies north and south shows that companies based in Northern Ireland are generally more optimistic about future growth and prospects.
Thirty-two per cent of companies in Northern Ireland have increased their prices, are more optimistic about employment prospects and are more likely to increase sales in the future.