Naysayers defied by dynamic Irish economy

It is always a challenge to measure the temperature of any economy as official data tends to be historic and forecasts are by definition estimates rather than facts.

However, every six months a large group of stockmarket-quoted companies is obliged to divulge their financial performance and that can reveal a lot about the state of their business environments.

In recent weeks, an eclectic range of Irish companies have released their results for 2013, and in doing so they have also provided insights into how 2014 has begun. In the round, this assessment is broadly positive.

These companies serve a wide range of markets and have quite different business models that are shaped to address the products or services they focus on. A common theme, however, has been persistent reference to a recovering Irish economy.

In the financial services market, it is worth noting what Bank of Ireland, AIB and FBD are saying. The two pillar banks are, clearly, still recovering from the ravages incurred after 2008.

Nonetheless, both are noting a pick-up in economic activity across Ireland. Employment stability and new jobs stimulate demand for everything from loans to credit cards. Rising commercial and residential property prices help repair some of the bad debts that exist within the system.

The insurer FBD uses a very valuable index which tracks consumption of petrol and diesel. This measure, after years of decline, is trending upwards again and is a sure sign of increased movement of road vehicles.

That too points to better economic times. Indeed, FBD is citing a faster-than- anticipated economic recovery as the reason why its volume of claims has moved upwards quickly.

Among transport companies, there are also encouraging signs. Aer Lingus continues to highlight a strengthening in demand for its long-haul services on the Atlantic, so much so that it is adding 20% to capacity this year. Ryanair has increased short-haul flights to and from Ireland and just last week reported a higher load factor which measures how full its planes are.

The shipping company ICG (owner of Irish Ferries) has cited increased freight and passenger demand as a reason for it to deploy another ship on routes to and from Ireland.

Construction-exposed firms such as CRH, Grafton Group and Kingspan are close to the pulse of construction in Ireland which has been effectively dead for almost five years. Now, they all note a clear, if cautious, recovery in their Irish units.

This is hugely important as construction is an employment-rich activity and has reached a low base that is below the long-term demands of the economy. A measured but growing volume of residential and commercial projects would add a positive backdrop to the economy’s recovery.

Another piece of the economic jigsaw is the agri-food sector and here too you can witness a sequence of encouraging developments. Anyone in the southeast will notice the enormous new milk powder plant being constructed by Glanbia at Bellview.

Near Naas a huge facility is being built by Kerry Group to house its advanced product research and development resources, which could employ close to 1000 when completed. From the middle of next year, Ireland will no longer be fettered by milk quotas and already there are signs that annual milk output will rise materially as 2015 unfolds.

These positive signs take place while the euro reaches multi-year highs against the US dollar. Can you remember the heroes who told us all that Ireland and the euro were economic wrecks after 2009? It appears their loud “glass half empty” notions have been defied by a resilient and dynamic Irish economy.

* Joe Gill is director of corporate broking with Goodbody. His views are personal

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