Recent results 'paint a positive picture of economy'

Updated / Friday, 2 Mar 2018 10:28

Investec's chief economist Philip O'Sullivan says Exchequer figures should be positive

Figures released this week showed that unemployment fell back to 6%, the manufacturing sector is continuing to grow, and numerous Irish firms - including two of the big banks - increased their profits.

It will be next week before we learn what it means for the Government coffers, as Storm Emma has pushed the release of February’s Exchequer figures from this afternoon to next week.

Investec’s chief economist Philip O’Sullivan has assessed this week’s data and what it tells us about the health of the Irish economy.

He said this week has been very useful in terms of taking the temperature of the Irish economy, and  the results paint a positive picture of the economy.

"In terms of AIB and Bank of Ireland’s numbers, they were very good. What was common across them was that they were showing strong growth in new lending. They both have a very strong capital base to support that; very improved asset quality due to rising employment and rising asset prices, and both banks have signaled their confidence in terms of dividend policy.

"AIB has increased its dividend by 30%, and Bank of Ireland has reintroduced a dividend for the first time since 2008."

Mr O’Sullivan said the slower growth in manufacturing in January and February which he said followed on from December which was the all time highest PMI on record, so therefore not a cause for concern.

The 56.2 PMI released yesterday "is still consistent with a very sharp rate of expansion for the sector driven in the main by export growth".

In terms of next week’s Exchequer figures, Mr O’Sullivan said if you take your lead from the January Exchequer returns, what they showed was very good growth in tax receipts up almost 5% year on year, with noticeable out performance by the domestic facing indicators.

"Income tax was up by 6.6% year on year, and that’s after the tax cuts that we would have had in the budget, and VAT was up 5.7% year on year, and that would reflect the trading performance for retailers over the key Christmas trading period."

"I would expect similar outturn when the data from February is released," he said.