BUSINESSES conditions in the north improved in the first quarter of 2023, a new survey suggests.
The latest quarterly economic survey (QES) from NI Chamber and BDO said four-in-five firms were trading well or reasonably well in the first quarter (Q1), with business sentiment significantly improved.
Some 60 per cent of those surveyed expect their company turnover to grow over the next 12 months.
It comes just days after the Northern Ireland Statistics and Research Agency (Nisra) reported that the north exited a technical recession in the final three months of 2022.
The NI Composite Economic Index, considered a similar measure to gross domestic product (GDP), grew by 1.3 per cent in the fourth quarter of 2022, largely on the back of the services sector.
It followed two successive quarters of decline last year.
However, the NI Chamber’s research showed the economy is still underperforming in early 2023.
Just over half (51 per cent) of the 243 respondents to its QES said they were still operating below capacity in Q1. And while inflation pressure showed signs of easing, it remains extremely high, with firms under pressure to pass on the costs.
The vast majority (84 per cent) of businesses also reported being negatively impacted by energy costs in the first quarter.
The survey again highlighted the tight nature of the Northern Ireland labour market, with access to skilled workers continuing to be a major issue for many companies.
Some 92 per cent of manufacturers and 82 per cent of services businesses reported difficulties in sourcing staff.
Labour costs now rank as one of the most dominant cost pressures facing businesses here.
The survey was conducted between February 21 and March 6 2023, meaning some of the responses predate the announcement of the Windsor Framework deal on February 27.
NI Chamber’s survey revealed how important that deal is for businesses here.
Three-in-five (60 per cent) said a deal around the Irish Sea trading arrangements was their key policy ask for driving growth in the Northern Ireland economy.
A majority of businesses (56 per cent) said they have now adapted to the new trading arrangements.
Just under half (46 per cent) said improved access to labour and skilled workers would unlock growth potential in the north, with 40 per cent flagging up corporation tax.
NI Chamber’s outgoing chief executive, Ann McGregor said: “After a notable decline in business confidence in the second half of 2022, results from Q1 of this year show a significant and timely improvement.”
She said the attention on Northern Ireland following the announcement of the Windsor Framework and the 25th anniversary of the Good Friday Agreement, present an opportunity.
“2023 is a year of potential that Northern Ireland must harness,” she said. “This means turning targets into action and being confident and ambitious about economic growth now.
“Three years of economic challenges including EU exit, the pandemic, global supply chain crises, inflation and political instability have all taken a significant toll on our members, so it is encouraging to see sentiment improving, albeit from a weak base.
“What matters now is that policymakers commit to an absolutely razor-like focus on economic growth – that includes listening to businesses on how to drive it. We must capitalise on the opportunities offered by the Windsor Framework and ensure that operational challenges are minimised.
“Of course, that is just one part of the jigsaw; for optimal growth businesses need a restored, functioning Executive to support them in attracting and retaining the best people, with the right blend of skills. Helping businesses tackle the skills challenge is just one of the many reasons we need to see the devolved institutions restored urgently.”
Brian Murphy, managing partner at BDO NI, said: “It’s been a long time since we’ve seen such positive momentum and sentiment from Northern Ireland businesses, and it is great to see it.
“Although local companies still have challenges to face, it is hugely encouraging that we are seeing such levels of consistency in positive sentiment across all sectors.
“For Northern Ireland companies to continue to compete there is an urgent need for investment in people and skills, this will facilitate access to a diverse and skilled workforce, which is clearly in demand. Such investment would play a key role in boosting productivity across the economy and as a result, unlocking our future growth potential.”
