EXTERNAL FACTORS KEY TO IRISH ECONOMIC RECOVERY - It used to be downgrade after downgrade, but forecasts for the economy are looking brighter. This morning Ulster Bank has published a 'less negative' outlook, because our trading partners' economies are improving, and external demand, it says, is the key driver of a return to growth here. The bank has revised its forecast for the peak in unemployment down to 13.4% in the middle of the year, from a previous forecast of 15.4%.
Ulster Bank's economist Simon Barry says the best way to characterise the Irish economy now is is that it is still very weak but is in the process of stabilising. He says that one of the key areas which does offer some hope of a return to positive growth is what has happened in the international environment, where the country's main trading partners have seen steady upward revisions to growth expectations for the coming year. He says that, in Ulster Bank's view, this means that Irish exports are likely to see a year of expansion in 2010. He also notes that some of the surveys, including the monthly purchasing managers index, are starting to reflect some improvement in international conditions because export orders are now beginning to rise.
Mr Barry says it is inevitable that interest rates will rise from their record lows this year for two reasons - banks' funding costs remain under major pressure and due to the economic cycle. He says the recovery in the euro zone will see the ECB becoming uncomfortable with interest rates at their historic lows of 1%.
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SMALL SIGNS OF IMPROVEMENT IN JOBS MARKET - Recruitment firm CPL has reported profits before tax and impairments of €2.4m for the six months to December, down from €6m the same time the year before.
Anne Heraty, CPL's chief executive, says the real news from the company's results is that while the jobs market is still very difficult, CPL is seeing small signs of improvement in both candidate and client sentiment. But the firm will need to see an improvement in the economy first, before any improvement in jobs growth or recruitment is evident, she adds.
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MORNING BRIEFS - ESB International opens its Marchwood Power plant in Southampton today. Marchwood is a 3380m sterling gas-fired station, which was developed in partnership with Scottish and Southern Energy.
*** With reports of interest rates on the rise at Irish banks without any moves at the ECB, the US Federal Reserve last night left its interest rates near zero, and said it would keep them there to help an economic recovery held back by high unemployment. Its statement had a brighter tone than last months, but it did not again mention any improvement in the housing market.
*** US President Barack Obama in his first State of the Union address said creating jobs must be the nation's number one focus. He defended his bank bailout policy, saying it had saved many jobs, but said there would be a freeze on spending from 2011 to tackle the budget deficit.
*** The ISEQ index rose by 27% last year according to its annual statistical review. This was after a fall of 66% in 2008. In the year two exploration companies listed on the exchange, and names that left it include Anglo and Newcourt. There are now 39 companies listed on the main market, compared to 53 five years ago.
*** On the currency markets, the euro is is trading at $1.4008 cents and 86.47 pence sterling.
