Irish SMEs are creating jobs at the fastest pace in nearly a decade, but there is a widening split between domestic-facing firms and exporters, according to the latest Linked Finance business optimism index.The report, conducted by Ipsos B&A among 370 firms between April 16th and May 1st, said the employment gap – the net balance between SMEs hiring and those reducing headcount – is wider than at any point since 2016.Overall optimism is holding at 63.5 per cent positive, broadly in line with the last quarter of 2025. Beneath the headline figures, the report said exporters are “absorbing the cost” of renewed global instability.Activity among exporting firms has fallen and is projected to decline further in the second quarter.The gap between the two groups is “among the widest” recorded by the index and points to a “two-track SME economy” emerging, made up of “domestic firms steady or expanding [and] trade-exposed firms in retreat”.Cost pressures also remain elevated, with 39 per cent more SMEs raising prices than cutting them, while operational profitability has slipped back into negative territory. The retail and wholesale sector continues to exert the largest downward pressure on margins.SMEs were also asked for their reaction to the recent fuel protests. Some 54 per cent agreed to some extent with the protesters’ approach, against 37 per cent who disagreed. Support was consistent across regions and rose to 71 per cent among firms with 10 employees or more. One-in-four SMEs based outside Dublin describe the Government’s response as “very negative”, which was three times the level recorded in Dublin.Linked Finance chief executive Niall O’Grady said the data for quarter suggests there is a “two-track Irish SME economy”.“Job creation is at its strongest level in years, which underlines the underlying resilience of the sector,” he said. “But that headline number masks real strain among exporters, who are absorbing the cost of global uncertainty in real time and a profitability picture that has slipped back.“What we’re seeing in our own loan book mirrors the survey: application activity is holding up well, but customers are drawing down funds more cautiously. Businesses continue to plan and invest, but are doing so with one eye on the wider environment. “The focus for policymakers now is on reducing uncertainty – particularly around costs, trade conditions and access to finance – to support that momentum.”