There was a drop in the number of small and medium sized firms experiencing growth in the second quarter, according to figures from the all island business group, InterTrade Ireland.

29% of firms reported growth between April and the end of June, down from 37% in the first three months.

InterTrade said the drop could be related to external factors, such as weak growth in the euro zone market, or to the increased speculation about a rise in interest rates. 

Businesses also remain concerned about cost inflation and the linked and growing issues of cashflow and late payments, it added.

However, firms are still in expansion mode. 69% have plans to invest in their business over the next 12 months, especially in marketing and staff training. Manufacturing firms and those who are exporting ae the most likely to invest over the next year. 

The number of companies reporting staff increases remains the highest since 2009, with 11% of firms reporting an increase in staff.

Eight out of ten SMEs are currently not exporting, a figure that InterTrade would like to see significantly boosted. Firms said that the main challenges to export across the border and off the island were a lack of time or management resources, the perceived cost of entry to new markets and a lack of internal financial resources.

InterTrade Ireland's quarterly business monitor survey is the biggest and most comprehensive business survey on the island of Ireland and is based on the views of over 750 business managers. 

"It is encouraging to see such a significant percentage of firms planning to invest and in particular that they are looking to invest in marketing and staff training," commented InterRrade's economist and policy research manager Dr Eoin Magennis. 

"In 2008 when the recession began in Ireland, investment in these activities was the first to be cut. Investing in marketing and staff training reflects a change in business focus towards strategies for growth at a time when many firms are expressing cautious optimism about the future," he added.