Key indicators suggest worst may be behind us

Q: Is consumer confidence back?

While only a mindless optimist would suggest that austerity has ended, the new year has at least started on a more upbeat note than at any time since the bubble burst and the economy plunged into the deepest recession in the State’s history.

The economic indicators published in recent days are positive and suggest people are slowly becoming more confident that the worst may be behind us.

On Wednesday the Department of Finance published its end-of-year report, which contained some good news. Exchequer returns showed the State’s finances were in better shape than expected, with tax revenues higher and spending lower than forecast.

“This is a positive development . . . It gives me further confidence that the budget tax revenue target for 2013 is both robust and achievable,” said Minister for Finance Michael Noonan.

A day later data for the services industry showed the sector had expanded for the fifth successive month. The NCB Stockbrokers purchasing managers’ index showed export orders rising at their sharpest rate since September 2006 and the rate of job creation is growing for the fourth successive month and at a five-year high.

The Live Register figures published by the Central Statistics Office revealed the numbers claiming unemployment benefits also falling. The seasonally adjusted register fell by 1,400 to 430,900 in December while those claiming benefits over the last year fell by 11,051.

This news is good, but it should be noted that the rate of unemployment is still 14.6 per cent. A breakdown of the figures also shows long-term unemployed in December at 187,144, up 6,346 or 3.5 per cent on this time last year.

Survey of sentiment

There is also some optimism among retailers after the best pre- and post-Christmas sales in years. Some told umbrella group Retail Ireland that sales on the two days after Christmas were up by 10 per cent on last year. In October, the most recent month for which figures are available, sales volumes were up 3.1 per cent compared with the same month in 2011.

Retail Ireland also carried out a survey of sentiment and while shop owners are not getting the bunting out, they are not as gloomy as last year. A fifth predicted business would be poor in three months while more than half said it would be average; 27 per cent predicted business would be good. This time last year two-thirds predicted their spring-time business would be poor.

One of the causes for optimism may have been the budget. It was perhaps less harsh than many anticipated.

Another straw in the wind might be found in the comparatively weak sales of books predicting economic Armageddon. In the run-up to recent Christmases past, such publications were everywhere. This year Fifty Shades of Grey dominated.