Business confidence has hit a 21-year low according to BDO's latest Business Trends report which records the lowest scores since the survey was launched.
BDO's Optimism Index, which predicts business performance two quarters ahead, fell to 88.9 in January from a reading of 90.3 in December - the eighth consecutive month that the Index has remained below 95.0, the mark which indicates growth.
BDO's Output Index, which predicts short-run turnover expectations, also declined further away from the 95.0 mark, falling from 93.1 to 92.3 last month.
While the overall economic outlook remains bleak, the survey does suggest the labour market and the manufacturing sector are about to rally. BDO's Employment Index, which measures businesses' hiring intentions over the next two quarters, rose to 95.1 in January from 93.0 in December, the first time the Index has stood above 95.0 since April 2012.
Optimism for manufacturing firms rose to 95.2 in January from 91.9 in December, while their Output Index score, indicating manufacturers' order book strength, increased to 92.3 in January from 90.6 in December.
Peter Hemington, BDO partner, said: 'In spite of a strengthening labour market, business confidence continues to weaken, and improved hiring intentions are not translating into growth plans. It seems the damaging effects on businesses of five years' zigzagging economic growth, has left them wary of making concrete plans for expansion and resigned to the "new normal" of economic stagnation.'