Irish domestic business has had its best year since 2000, according to the new Bank of Ireland Irish Business Review.
The review is a sector by sector analysis of Irish business by Bank of Ireland Global Markets and Bank of Ireland Corporate Banking. Sectors covered include retail, hotels and restaurants, construction, agriculture and industrial/manufacturing.
The review finds that the construction sector remains a key driver of economic growth in 2004, with 22,000 additional jobs added in the year to the third quarter of 2004. This was followed by the financial sector, with 12,000 new jobs and then by the retail sector, which added 9,000 jobs last year.
Bank of Ireland says that lending to the construction sector jumped by 47% in the 12 months to September 2004 compared to 22% a year earlier. It says the sector is also set for another strong year in 2005 with activity levels underpinned by strong income growth and low interest rates.
The bank says that consumer spending, while it has gradually picked up momentum in 2004, has lagged income growth. However, competition is improving in the sector and falling prices are par for the course in the clothing and footwear sector where annual price falls of 3-5% are evident in recent years.
In the bar sector, the review says that price discounting may well have to become more of an industry feature if the consumption trend is to reversed. The spending in bars is currently 14% below its level in early 2000, at the height of the Tiger era.
The BoI review notes that the hotels and restaurants sector has not participated fully in the economic upturn with employment levels falling. There has also been subdued growth in the number of visitors here since 2000. However, bank lending to the sector did grow to 24% from 16% in 2003 and the immediate outlook for the sector appears reasonably favourable.
However, trends in the farming sector are less encouraging with the data pointing to a sector in long term decline. The output of the sector as a share of GDP has declined from around 10% in 1994 to just 3% now. The numbers working in farming has also fallen and now accounts for 6% of total employment compared to 12% a decade ago.
In the industrial sector, the review says the indigenous sector outpaced the multinational sector last year. Output per hour in Ireland increased by a mammoth 108% compared with just 17% abroad.
'The trends based on published reports, research and ongoing corporate activity experienced by Bank of Ireland, show that 2004 was the best year for Irish business since 2000, and the indications for 2005 are positive with an expectation of 6% economic growth,' commented Dan McLaughlin, Chief Economist with Bank of Ireland Global Markets.
