The first week of the new year has brought a welter of conflicting signals about the US economy. There are encouraging signs that the world's largest economy may be on the threshold of a recovery which would be very welcome news indeed.
The requirement for a bounce in the US as a precursor to a resumption of growth in the Irish economy is one of the few things on which domestic economic commentators are currently in agreement.
The temptation is to focus on the positive news flow and play down the negative. The main cause for optimism was the publication on Wednesday of data on activity in the manufacturing sector which is the power house of the US economy. The good news was that although this sector is still shrinking, it is not shrinking by as much as expected. On its own this double negative would not be much of a foundation on which to construct an argument that the US economy has turned the corner. There is, however, an amount of supporting information - both anecdotal and statistical - to justify a more upbeat assessment.
New orders, the very life-blood of manufacturing industry, are at their strongest since April last year; the amount of unsold products being stored by manufacturers is falling and flagship US companies are starting to talk things up. Contrast this however with the US unemployment figures that came out on Thursday, the day after the positive news on manufacturing. They showed the number of people claiming against unemployment insurance is still rising and yesterday we saw the other side of the coin with the publication of employment figures for December.
They showed that the number of Americans at work is still falling, but once again the rate at which the number is falling has eased. Wall Street took the view that the glass was half full and focused instead on supplementary data which revealed that those in work are working harder - and for longer - in December than they were in November. The reality is that it is still far to early to say whether or not a recovery in the US economy is under way. The picture will become clearer over the coming weeks but in the meantime it is only prudent to err on the side of caution. If the US economy is already over the hump it will be a most welcome development, but such a turn of events would take even the most optimistic economic forecasters by surprise.
The situation at home is equally confused. This week saw the publication of data showing that the rate at which Irish manufacturing activity is shrinking has also slowed markedly. Yesterday saw the issue of similar data for the services sector which indicated that it has grown for the first time in five months. We will not have a good focus on what is happening here until we can say with some certainty that the US slump is over and the recovery predicted for the middle of the year is on the way - possibly a little earlier than some expected. This week has given us reasons for a little cautious optimism that this may be the case.