DUBLIN, July 14 (Reuters) - Fading pessimism among Irish businesses in recent months suggests the country may be near the low point of its recession, according to a quarterly survey of business sentiment.
Business activity continued to weaken in the second quarter of 2009 but the pace of decline was notably less than the first three months, according to the Summer 2009 KBC Ireland/Institute of Chartered Accountants in Ireland business sentiment survey.
While 59 percent of firms reported reduced activity levels, the improvement from 69 percent in the previous period indicated a return to levels seen before the intensification of the financial crisis towards the end of last year, the survey found.
"There is no question that Irish business is still facing major difficulties but there are also marked tonal differences to summer survey responses that suggest many companies believe the worst may be over," Ronan O'Brien, communications director at the Institute of Chartered Accountants in Ireland, said.
One in five respondents felt the downturn will end within 12 months compared to only one in 16 in the last survey while the number that believe the recession will last more than two years almost halved to one in four.
Businesses in Ireland have been squeezed after the bursting of the country's property bubble transformed the former "Celtic Tiger" economy into one of the industrial world's worst performers.
Widespread job shedding remained a striking element of the survey with half of the companies letting staff go and just one in 17 increasing employment.
However, the fall in labour meant two-thirds of businesses contacted reported a decline in operating costs in the past three months -- compared to one-third in the previous survey -- while just one in 20 indicated that their costs had risen.
"Conditions are expected to remain tough in the months ahead so it seems Irish businesses expect to 'bounce along the bottom' rather than experience any marked recovery between now and the end of the year," O'Brien added. (Reporting by Padraic Halpin; editing by Stephen Nisbet)