A survey of businesses carried out last month has found that while activity is still weakening, this is happening at a slower rate than in early 2009.

The business sentiment survey was carried out by KBC Ireland and the Institute of Chartered Accountants, and reflected the views of accountants in 340 companies.

More than half of companies indicated that they had shed jobs in the last three months. For the next three months, 40% of firms expect further job cuts, though 10% expect to increase staff numbers.

But two-thirds of companies reported a fall in their costs in the past three months. KBC economist Austin Hughes said this had contributed to a less gloomy outlook among the firms surveyed.

In March, 81% were more pessimistic about general economic prospects, with only 3% more positive. This time, the pessimistic figure fell to 39%, with 17% more optimistic.

Only one-third of firms planned to increase demand for credit in the next 12 months. Mr Hughes suggested that - even if lending from banks were flowing freely - a credit driven recovery in the Irish economy would be unlikely. Asked about access to lending from banks, 20% of firms suggested credit conditions had worsened in recent months, while 75% said conditions had not changed. 6% saw an improvement.