Business Irish

Tuesday 12 December 2017

Irish firms are more hopeful on growth than those in EU peripherals

Brendan Keenan

Brendan Keenan

IRISH firms are far more optimistic than their counterparts in other eurozone countries, while their performance is markedly better than the other financially-stressed members of the single currency.

This analysis comes from the Markit research company which carries out the monthly PMI surveys of managers in the EU.

The report was prepared before the news that the Irish economy shrank in the first three months of the year.

The PMI surveys are seen as a good snapshot of current activity in manufacturing and services, and a predictor of short-term trends.

Exports data

"When comparing PMI manufacturing exports data with other struggling Eurozone economies (Greece, Italy, Spain), a marked divergence can be seen," Markit Economic Research says in its analysis.

The Irish PMI survey, compiled for NCB Stockbrokers, showed manufacturing expanding for the fourth month in a row in June -- although services fell slightly -- whereas output has been declining in the other three countries since last October.

"In fact, Ireland was the only eurozone country monitored which saw output growth during June, as even the likes of France and Germany posted declines," the report says.

"Irish firms have worked hard to improve their relative competitiveness. PMI data has shown falling selling prices in all but one of the past 45 months.

"The strength of optimism in Ireland with regard to future output is in stark contrast to the picture in Spain and Italy, where sentiment has dropped since the start of the year.

Extra staff

"Moreover, intentions in Ireland to take on extra staff over the coming 12 months compares with expectations of job shedding in both Spain and Italy," Markit says.

The size of the Irish export sector, led by foreign-owned firms, has offset the falls in domestic activity, giving the country small levels of positive growth.

Markit warns that continued success in export markets is by no means guaranteed, "given the global economic slowdown highlighted by PMI data," Markit says.

"A slowdown in the global economy and the weakness of domestic demand provide risks to this bullish outlook, with further difficult times ahead."

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