In the first Economic Trends survey of 2023, Cork Chamber asked members about their experience of the most recent business quarter, Q1 2023 (January, February, March) along with the ongoing business impact of high energy costs and skills gaps. This Economic Trends Q1 2023 captures a snapshot of business experiences and of the overall operating landscape at the start of 2023 in a period which saw ongoing challenges as energy costs and uncertainty in the global economy remained high.
Nearly 75% of companies were very concerned or concerned about the impact of energy costs on their businesses at the end of Q1 2023 on a par with Q4 2022. Only 4% of businesses reported they were ‘not concerned’ with their impact.
Persistently high energy costs have triggered a reduction in profitability for 73% of businesses surveyed, compared to 29% in Q1 2022. Fortunately, businesses continue to take proactive steps to cushion the blow of these impacts and reduce their greenhouse gas emissions with 21% of companies increasing investment in energy efficiency measures and 8% investing in renewable energy. Similar to Q4 2022, only 2% of companies were looking at headcount reductions.
Confidence in the Irish economy has risen again to 85% up from 70% last quarter, continuing the trend reversal of falling confidence in the first three quarters of 2022. Housing supply and the rising cost of doing business are the top reasons (16%) noted for a lack of confidence in the Irish
economy, followed closely by inflation (15%) and energy prices (14%). Skills shortages this quarter have fallen to fourth.
Hiring continued to be strong through this quarter with 42% of businesses increasing their headcount and only 10% cut their numbers, and 48% of businesses said their staffing stayed the same.
Businesses continue to plan to increase employee numbers, with 58% expecting to increase their headcount (53% in Q4 2022). However, specialist skills shortages are reported as the ongoing top barrier to filling vacancies (51%), a trend that was consistent across 2022, positively businesses reporting difficulty in hiring for open roles dropped from 64% in Q4 2022 to 49% this quarter. Housing shortages (19%) are the second largest barrier, up from 5% in Q4 2022, while wage demands are an increasing issue.
49% of businesses experienced an increase in turnover in Q1. While this is down 2% from Q4 2022, only 13% experienced a decrease, the same as in Q4 2022. 56% of businesses expect an increase in turnover in Q2, while 36% predict it will stay the same and 8% anticipate a decrease.
Net profit has held relatively steady, with 32% of businesses experiencing an increase and 43% reporting no change since Q4 2022. 45% of businesses anticipate their net profits will increase next quarter and only 14% expect them to decrease.
