Today NCB release their latest Irish Economy Monitor, which tracks recent developments and provides their view on the prospects for the economy. Developments since the last update have remained broadly positive. The NCB Services PMI recorded the strongest rise in activity in five years in October.
Elsewhere, the NCB Manufacturing PMI showed an eighth successive month of improvement in that sector. Retail sales experienced a third successive month of growth in September, which confirmed an improved Q3 out-turn after a sluggish Q2. Reflecting the recent stabilisation in the unemployment situation, the numbers signing on to the Live Register fell for a fourth successive month in October. On the downside, they note a sharp fall in both industrial production and the merchandise trade surplus in September. However, it should be noted that these indicators can be quite volatile.
In this month’s Monitor NCB looks in detail at the new Personal Insolvency Bill in Ireland (slides 4-6) and Bank of Ireland’s recent ACS issuance (slide 42). The former has repeatedly come up in their discussions with investors as an area of focus given the potential impact it could have on the banks’ loan losses. On the latter, Bank of Ireland’s first benchmark ACS public issuances in three years, in a well-received sale on which NCB acted as co-lead, is an important development. They expect to see further Irish ACS issuance over the coming year, which underlines the improved funding outlook for the country’s banks.
Looking ahead, the main focus domestically over the coming weeks will be around the Budget, due to be unveiled on December 5. The government’s recently published Medium Term Fiscal Statement (MTFS) reaffirmed its commitment to implement a total of €8.6bn of fiscal consolidation measures over the next three budgets, €3.5bn of which will be unveiled next month. As a result of the additional colour provided in the MTFS, they have slightly increased their projected deficit for 2012 to 8.2% of GDP. However, they note that the November Exchequer Returns could prompt another revision to this, given that almost a sixth of the total annual tax revenue is due to be collected this month. They have left the headline GDP growth rates of 0.3% for 2012 and 1.5% for 2013 unchanged for now.
The November Irish Economy Monitor can be downloaded from here: www.ncbresearch.com/PDF_Archive/2012-11/Irish Economy Monitor November 2012.pdf
Philip O’Sullivan, Chief Economist.