The release of pent-up consumer demand will boost profits and employment prospects once the pandemic recedes, according to the latest AIB Business Activity Report.

The report uses percentage net balances varying between -100 and +100 to indicate the degree of pessimism or optimism, and firms in the manufacturing and services sectors are now showing a balance of 46%, up from October’s record low of +20%, the highest since June 2018.

The 26-point rise is also the highest increase since the report began in 2009. The latest survey was conducted between February 11 and 23.

Head of business banking Hilary Gormley commented: “With the output of many businesses still below pre-pandemic levels and supply chain disruptions impacting operations, it is clear that challenges persist for a significant proportion of Irish firms. Notwithstanding these challenges, sentiment is increasingly positive across both the manufacturing and services sectors.

“Encouragingly, firms are optimistic for key areas such as employment, capital spending and profitability.  Furthermore, it is clear that Irish firms are planning for continued investment in their IT capabilities and research and development as they seek to drive efficiencies and bring new and improved products and services to market.”

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More than half of firms reported output lower in mid-February when compared with pre-pandemic levels. This was slightly better than October but below June 2020 (74%), reflecting the economic hit from the latest lockdown restrictions.

The 12-month outlook for employment has improved, rising from 6% in October 2020 to 25% in February. Hiring intentions were stronger for the services sector (+28%) compared to the manufacturing sector (+20%). 

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