Ireland emerging from recession but job stats will not show until late 2010

IRELAND is emerging from recession though employment statistics will not show this until late 2010 or early 2011, according to NCB Stockbrokers economist Brian Devine.

The NCB services Purchasing Managers’ Index (PMI) has reported its first rise in 26 months. The headline index rose from 49.6 to 51.0, with 27% of respondents reporting a rise in activity during April. New orders in aggregate also increased for the first time in 27 months, reaching 51.4, up from 48.2 in March.

As Mr Devine explains: “The evidence is that the economy is coming out of recession. Non-industry services now make up about 65%-70% of our economy, which makes this survey very encouraging. We will see growth in services for the rest of the year.

“We still have high unemployment, but job figures should start to pick up towards the end of this year or perhaps early in 2011. We have known for a long time that the global economy is recovering, but now we are also seeing the start of a domestic recovery.”

Not surprisingly, optimism is at a two-year high among the 600 Irish private sector companies surveyed in the index. Half of all respondents forecast activity to be higher in 12 months from now, while just 19% predict a reduction.

Three of the four broad sectors monitored by the survey posted rising activity during April, led by Transport & Leisure. The expansion in the category was the third in as many months and was the fastest since June 2007.

Technology, media and telecoms and financial services also posted sharp rises in activity during April. The rise in TMT was the third in succession, while financial services activity increased at the steepest pace since June 2007. In contrast, business services contracted for the 23rd consecutive month. Plus, the rate of decline accelerated since the previous month.

Mr Devine added: “New business from abroad at Irish services companies rose further in April, extending the current sequence of growth to eight months.”