After a sharp drop-off in business sentiment in the summer period, the environment settled somewhat in the autumn, according to the latest business sentiment index from KBC Bank and Chartered Accountants Ireland.

It shows that while businesses are not exactly back at the heights of positivity that they were displaying late last year, they are not bowing to pessimism and appear to be relieved the Brexit effects have not thus far been as bad as some had predicted.

A clear slowdown in the pace of increase in activity and employment was reported by companies, particularly by those selling consumer goods and services. 

While companies remain cautious, the absence of a more immediate and more widely seen deterioration in Irish economic conditions may have eased some more extreme fears.

The research shows firms now judge the ‘macro’ consequences of the UK vote in a slightly less negative light.

Notably, there was little evidence of any marked weakening of growth momentum in areas such as food or manufacturing and only a slight softening in business services.

The survey indicates a marked and broadly pick-up in costs in the third quarter, including in circumstances where some sterling related disinflation might have been anticipated.

This could be partially explained by a rise in the cost of oil products since the spring and there is also some indication of a slightly firmer tone to prices in other areas, compared to the early months of the year.

Chief Economist with KBC Bank Ireland Austin Hughes, who carried out the analysis, said: “One slightly surprising aspect of the survey is that firms supplying consumer goods and services reported the most notable pull-back in growth of late.

“This probably owes something to a cautious Irish consumer but it may also reflect some Brexit related issues in areas such as retailing or the hospitality sector stemming from current Sterling weakness.

“If we are correct in this interpretation, the survey suggests that adverse Brexit impacts may be felt more widely across the Irish economy than is sometimes suggested.”