The Irish economy is showing signs of recovery after a short-lived downturn, according to the latest Purchasing Managers Index (PMI) published today by Dublin stockbrokers NCB.
The index, which gauges manufacturing activity, recorded overall expansion for the first time in seven months in February. The PMI recorded a figure of 50.4 for February just above the key level of 50 that divides contraction and expansion.
The improvement in the index was driven by increased industrial output, a rise in new orders and modest recovery in export sales.
Commenting on today’s figures, Mr Eunan King, NCB’s senior economist, said: "The sharp pick-up in the exports index and the recovery in output and orders indices in the last few months is consistent with the improving outlook for he global economy and suggests that the manufacturing sector is still in robust shape".
NCB, which has been consistently more optimistic on the Irish economy than many other Irish financial institutions, is sticking to a GDP growth forecast of 7 per cent in 2002.
This figure is considerably higher than forecasts from other analysts, who have predicted growth in the 2.5 to 4 per cent range.
NCB bases its upbeat analysis on a recovering global economy and a number of structural factors in the Irish economy. It feels the young age profile of the Irish population should sustain domestic demand in areas such as housing and services in the medium to long term.
NCB also plays down the influence of multinational companies on the Irish economy. It points out that such companies employ 130,000 people, a small proportion of the total working population of 1.7 million. As these companies pay little tax in Ireland and repatriate profits their linkages to the Irish economy are weak.
NCB also repeated its bullish stance on the Irish banking sector, recommending them as a play on the Irish economy.