On two fronts, confidence in the economy is increasing...
The first front is the NCB Services Purchasing Managers Index which rose in December to its highest level since the beginning of the recession. At 48.3 its latest reading, being below the critical 50 mark, indicates that activity in the sector is still declining. But the pace of decline is much more modest than before. Furthermore the improvement is coming from international orders showing that the domestic economy is what is holding things back. More detailed results of the survey suggest that wage falls are gradually working to reduce the rate of job loss in the economy. "We would expect that by the end of the first quarter of 2010 both GDP and GNP will have expanded", NCB's Brian Devine said on Wednesday. This tallies with Davy stockbroker's latest forecast for an end to the recession in the first Quarter of this year. Even if these predictions turn out to be over optistic in relation to the timing of a return to growth, they tally with latest growth figures from the Central Statistics Office to confirm the picture of a recession with not much life left in it.
The second is the first rise in 21 months in the Standard Life Financial confidence index. Taken during the second half of December, the index is undoubtedly in part a public reaction to the budget steering government policy away from increases in tax rates.