Corporate Ireland is in good health and that is an important position for those who care about building a positive future for Ireland.
A set of strong companies have the ability and potential to invest and grow which usually brings with it jobs and multiplier effects that support commerce across an economy.
At this point in time it is very evident that companies in both the public and private sectors are well positioned financially.
Evidence of this comes in many guises.
The Irish Stock Exchange Index (ISEQ) is up 23% in 2015 and that is driven by a succession of positive results from companies and associated optimistic comments about the rest of 2015.
Semi-state companies like the Dublin Airport Authority and Dublin Port are reporting a strong resurgence in business volumes and that is delivering higher profits and growing cashflow which helps lower debt to manageable levels.
Large multinational companies present in Ireland continue to make announcements on expanding which is, itself, a signal of confidence for the future.
These corporations, collectively, provide the employment and platforms from which a large proportion of Irish tax revenues derive.
Lower unemployment and higher corporate taxes convert in to rising Exchequer revenues and those, in turn, help alleviate the national debt and fund those parts of the State that have suffered from underinvestment since the global financial crisis.
It is clear that the corporate recovery is spread across a number of industrial and service sectors.
Transport companies, such as the ferry business ICG and Ryanair, are reporting robust passenger and freight traffic in Ireland.
Aer Lingus’ monthly data is indicating a big pick-up in long-haul travel, a key input to the thriving tourism sector in 2015.
Agri-food companies and Co-ops like Glanbia and Ornua have reported solid progress despite tough international markets. Financial services companies, including the banks, are still in recovery mode and that is reflected in their impressive momentum.
It is the construction sector, however, that is showing signs that are particularly valuable for the strength of the domestic economy.
Companies like Grafton and Kingspan are saying their Irish units are, at last, benefitting from an uptick in construction activity. To understand this you must delve into housing market statistics.
At the height of the boom, as many as 80,000 houses were being built in Ireland. In 2012 it was a paltry 8,000. Just imagine the effect that 90% collapse had on demand for labour and materials.
Between 2012 and 2014, the house build number increased to over 10,000. That implies a 25% increase in just two years. Moreover, economists forecast this will move to more than 16,000 by 2017 as we return to a level of normality.
It is estimated that natural annual house completions should be about 35,000 based on population and family formation trends. Working off the 2017 forecast implies a doubling in five years while a shift to “normal” levels would suggest a four-fold increase.
That construction scenario sits alongside a booming commercial property sector which is, itself, delivering more economic activity and jobs.
Taken together, the residential and commercial property segments of the economy have a disproportionately positive impact on jobs as they are labour intensive and tend to exist across the country.
Although many challenges exist to the condition of corporate Ireland, including the varied international risks to global growth stemming from China and ongoing tepid recoveries in Europe, the current financial state of Irish companies would point to a period of growth and expansion that ought to benefit their host country.
If the report card from September 2015 is an indicator, then we should look forward to a string of announcements that further expand the scale and importance of Irish companies, and with that, additional jobs and wealth creation should ensue.
Joe Gill is Director of Corporate Broking with Goodbody Stockbrokers. His views are personal.
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