Thursday 14 November 2019

Finally some good news -- but recovery hasn't happened yet

IT sounds pretty good. The vital services sector growing healthily and hiring extra staff for the first time since March; the Live Register at the lowest level in more than two years.

The services survey follows Monday's finding that manufacturing is also expanding and that conditions improved for the seventh month in a row.

It is certainly better than the opposite. Yesterday's data are the latest of several to show an economy which has stopped crashing; often described as "bumping along the bottom". The next stage is recovery -- but that has not happened yet.

Behind the figures lie the impact of foreign companies which are less reliant on conditions in Ireland and often, as with pharmaceuticals, pretty impervious to global recessions. The Live Register improvements owe a great deal to emigration, with the last employment figures fairly disappointing.

Nevertheless, there is some reason to think that, four years into the crash, the cycle might be ready to turn. It always does in the end, although this kind of recession lasts particularly long.

Any recovery would probably be weak and slow, but it could change sentiment significantly and feed upon itself. Last week's consumer confidence survey suggested two things are hurting the public mood -- the continuing difficulties in the eurozone and worries about December's Budget.

There seems little chance of a determined, vigorous response from Europe. The best one can hope for is that there is no new crisis. But the endless Budget speculation tends to kill off any chance of a pre-Christmas spending spree, however modest.

There are good reasons why governments keep the Budget cards close to their chests -- not least because they usually cannot agree on what should be in them. Advance notice also means advance opposition, but in current circumstances the gains from less uncertainty might outweigh these drawbacks.

Especially since the Budget may not be as frightening as many fear. The carry-over from 2010 mean it could be the softest tax package since the crash. If Europe could make some real progress, there might be hope for 2013.

Irish Independent

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