A “vulnerable tier”of the economy on both sides of the border could face exposure to inflationary pressures in 2017 despite the almost four fifths of busines running at or close to capacity.
That’s the warning from cross border business agency InterTradeIreland whose latest report says that over a third of businesses are running at break-even.
At the same time the quarterly business monitor - covering September - December 2016 - highlights that two fifths of companies in the reviving construction sector face problems recruiting sufficient skilled workers as business picks up.
“We are seeing a resilient, sustained recovery and notable symmetry in challenges faced by firms both North and South,” said Aidan Gough, strategy and policy director at InterTradeIreland.
“The number of companies across the island reporting stability or growth in the last quarter has remained fairly constant at 84 per cent; however exporters continue to fare better than non-exporters with 51 per cent experiencing growth compared to 36% per cent respectively.”
“With almost a third of firms reporting that they are running at break-even and 78 per cent already running close to or at capacity, there is a vulnerable tier of the economy that could be exposed to inflationary pressures.
“The Business Monitor results also reveal that companies across the island are experiencing similar challenges, although many are showing signs of a healthy economy and include increased competition, discounting by competitors and difficulties in finding skilled labour as companies grow.
“However the greatest challenge facing businesses is rising costs, particularly energy costs,” he added.
The report identifies an emerging trend in the number of construction businesses reporting difficulties in recruiting skilled staff.
“The construction sector was hit harder than others during the downturn but is reporting robust signs of resurgence with 82 per cent of firms confirming they are stable or in growth mode,” said Mr Gough.
“Over 75 per cent of businesses in the sector say they are profitable or very profitable. However, an emerging skills shortage in the construction sector is obviously an obstacle to continued growth. This may lead to building firms beginning to feel the pinch in terms of the acquisition of new contracts and servicing the needs of fuller order books.
“Nevertheless, the overall message is that of a robust economy, with companies going into potentially challenging times from a position of relative strength,” he added.