Pick-up in demand helps economy

As the country enjoyed its first week after the troika, the Government was greeted with strong growth figures from the quarterly national accounts that showed GDP rose by 1.5%.

Davy analyst Conall MacCoille said the rise in GDP was an indicator of the momentum that was building in the Irish economy for next year.

“The big picture from today’s data is that the economy has bounced back in the second half of the year, as we expected. This will provide strong momentum heading into 2014.

“Looking forward, stronger global demand will help Irish export growth and the buoyancy in the domestic economy looks set to continue,” he said.

Merrion Economics chief economist Alan McQuaid said the gross national product, which is more focused on Irish companies, reported even stronger growth.

“Meanwhile, GNP, which strips out the impact of multi-nationals, was up 1.6% in the quarter and 3.9% in the year in the July-September period.

“In the first three-quarters of 2013, it was 2.8% higher on average than the same period last year. The GNP figures seem to fit in better with the strong employment performance we’ve seen in 2013,” he said.

Investec analyst Philip O’Suillivan pointed to the strong growth in the construction sector which he believes will continue to grow next year.

“A highlight within the release was the strong gross domestic fixed capital formation result, as it posted a 10.9% quarter-on-quarter rise during the quarter.

“This was driven by an improvement in both building and construction activity, and machinery and equipment, albeit the former off a low base.

“The Construction PMI posted its first above-50 reading in six years in September (and it has stayed above 50 in the two readings since then, which augurs well for further expansion here in Q4),” he said.

The strong figures were as a result of increased domestic demand which may have been boosted by the introduction of the car licensing regime.

“The rebound in Q3 was largely driven by domestic demand, with net trade detracting from growth. Consumer spending registered a 0.9% rise on the quarter – helped by the new seasonal pattern of car sales,” said Mr MacCoille.

The revised figures for earlier in the year saw the double dip recession from 2013 has been revised away with GDP now reported to have fallen by 1.1% in the first three months of the year, but then grown in the second quarter.

“Given how volatile and revision-prone Irish quarterly national accounts data are, we prefer to look at what the underlying trends are saying as opposed to obsessing about headline figures.

“The release confirms what we had already suspected — namely that the prospects for the domestic economy have clearly improved since the beginning of H2,” said Mr O’Suillivan.