Path to recovery: Six signs that we're moving in the right direction
CONSUMER confidence has hit a nine-year high.
And households are now expecting the first rise in income since 2007.
Lower oil prices, modest income tax cuts that kicked in at the start of the year, and post-Christmas sales have boosted confidence, the Economic and Social Research Institute/KBC Bank Consumer Sentiment Index shows.
The survey hints at stronger consumer spending this year, according to economist with KBC Bank, Austin Hughes.
The overall index increased in January to 101.1 from 90.5 in December. It was the fourth- largest monthly increase since the survey began 19 years ago.
Mr Hughes said: "The key driver of the rise in confidence in January is a notably more positive view of household finances."
He said that the January survey shows that for the first time since mid-2007, more consumers expect their household finances to improve rather than worsen in the year ahead.
However, the team behind the survey noted that January is typically a strong month for consumer sentiment.
But the KBC Bank economist stressed: "The details suggest the economic recovery should be more broadly felt in 2015." The situation in Ireland is in contrast to the euro area, where consumer confidence levels are more muted.
IRELAND is set to remain the fastest growing economy in Europe, the European Commission has said.
But it warned that the deferral of water charges and the amount of money spent on Irish Water negatively affected the budget balance last year.
In its winter economic forecast, published yesterday, Brussels slightly downgraded its growth projection for the Irish economy for this year to 3.5pc from 3.6pc.
The commission said GDP growth looks resilient this year and next, with the deficit set to drop to 4pc of the value of the economy in 2014 - slightly higher than a previous forecast.
It said spending rose at the end of last year, mainly in health, and, unlike in previous years, it wasn't offset elsewhere.
"On top of extra spending, the deferral of water charges to the first quarter of 2015 and the front-loading of capital injections in Irish Water also negatively affected the 2014 budget balance," the commission report said.
It said that a pension package for the workers of Waterford Wedgwood also helped pushed up the deficit.
The commission said the deficit this year is expected at 2.9pc of GDP, which is within the target set for the European Union countrues.
However, if no new measures are taken, it expects the budget to rise to 3.1pc of GDP next year.
While economic growth was driven by exports last year, it said household spending is expected to play a bigger role in 2015.
PROPERTY prices here should see the strongest gains in Europe this year despite new Central Bank lending restrictions, a leading ratings agency said.
Standard and Poor's said prices will jump by 9pc due to lower unemployment, the improving economy and strong demand for homes.
The ratings agency said the rises would have been much stronger if the Central Bank had not acted to restrict mortgage lending.
The lending controls should prevent house prices from spiralling out of control and means prices will rise at a slower rate than they did last year.
S&P predicts house price rises of 9pc in 2015, and 5pc in 2016. This is compared with growth of around 16pc last year.
"Ireland should see the strongest price rises among Europe's housing market this year, growing by 9pc on the back of an improving economy and short supply of housing that has released pent-up demand," economist Jean-Michel Six said in a report on Europe's housing markets.
"We think stronger lending controls by the Central Bank of Ireland should prevent house prices from spiralling out of control," the report stressed.
The report points out that although Dublin led the upward trend, prices are also recovering outside the capital.
It estimates that prices rose by 5pc outside Dublin last year.
House building picked up last year, with completion jumping by 35pc in the first 10 months of last year, but construction levels are still well below demand, S&P said.
Irish businesses are the most optimistic in Europe about prospects for growth in 2015, a survey has found.
The research, from consultants Grant Thornton, shows that Irish businesses remain positive about prospects for profits and employment.
Grant Thornton's 'International Business Report 2015' shows that 82pc of Irish businesses are optimistic for growth this year. The figures put Ireland ahead of Australia at 70pc, Britain at 68pc and the USA at 59pc. India, at 92pc, was the most optimistic globally.
The research found that the outlook for 2015 is Ireland's highest level of business optimism since 2007 and well above the global average of 35pc.
Grant Thornton partner Patrick Burke said Irish businesses continue to remain optimistic and companies look set to grow employment and profits this year.
"This optimism, however, must be viewed in the context of the low point, the financial crisis, from which businesses in Ireland have come," Mr Burke said.
"In many ways, 2014 was the first year since the financial crisis where Irish businesses felt they were really back on track.
"The measures adopted by businesses in Ireland to cope with the downturn helped them to evolve into leaner operations, the fruits of which are now ripening."
Ireland also ranked highly across a number of other indicators in the survey, with 60pc of businesses expecting employment to increase.
THE "wealth" of households rose last year, with debts owed falling at the same time.
The Central Bank said that what it calls net wealth now stands at €125,000 per person.
The so-called net worth of households has been pushed up by rising property prices, and represents the value of assets people own, less their debts.
Households paying down debt as fast as they can means borrowings per head fell to €35,000 per head, in the July to September period last year.
The Central Bank said that there had been a slight increase in disposable income, and a reduction in household debts.
However, borrowings here are among the highest in the EU.
The data shows that household debt represents 177pc of disposable income. This means that people owe 177pc more than they earn, after income and other employment taxes.
But Davy economist Conall Mac Coille said that debts levels are now at their lowest levels since 2006.
The economist said: "Clearly, Irish households are still in de-leveraging mode, paying down bank debts from current high levels."
Mr Mac Coille said the improved household net wealth position reflected rising share prices and house prices.
He said that since the beginning of 2014, the Central Bank's estimate of the value of housing assets has increased by €45bn, to €389bn.
This is based on an 11.8pc rise in the value of residential property prices over that period. Household financial liabilities, or debts, have fallen by €7bn since the beginning of the year.
The manufacturing sector here recorded its sixth double-digit month of annual growth in December.
Production for manufacturing soared 15.3pc in the month, compared with the same period last year.
But it also recorded a dramatic monthly fall compared with November, dropping 12.7pc. Monthly data, however, can be volatile.
Analysts hailed the annual figure as demonstrating a rebound in the sector last year. "Clearly, Ireland's exposure to the UK and concentration in defensive sectors such as food has protected it from weak demand in Europe," said Conall MacCoille, analyst with Davy stockbrokers.
And he dismissed the monthly drop, urging that attention be focused on the bigger picture.
"Investors should not make too much of the volatile 12pc fall in industrial production in December, which entirely reflects the erratic modern sector," Mr MacCoille said.
"The bigger picture is that 2014 saw a strong rebound in Irish industrial production."
In the three-month period between October and December, manufacturing output was up 8.3pc on the preceding three months.
Alan McQuaid of Merrion Stockbrokers said the data underlined how well the economy is doing compared with the rest of the eurozone.
"Although the annual increase was less than half that of November, it was still the sixth double-digit increase in a row, and the envy of our European partners," Mr McQuaid said.