Banking Matters 
   with Danske Bank     

         Angela McGowan, Chief Economist, Danske Bank      

Stronger data going into Quarter 2 2014
By Angela McGowan, Danske Bank Chief Economist

Quarter 1 2014 began well for the economy, with all the economic indicators pointing in the right direction and confirming that we are now in recovery mode.   April, too, was a good month and this bodes well for the remainder of Quarter 2.  


In the global environment we saw the US data improve as jobless claimants fell to the lowest level since 2007 and retail sales data also ticked up.  Manufacturing production in the States recovered briskly during March and even the February data was revised upwards.  After the very cold winter had put a bit of a dent the US Quarter 1 performance, the overall picture now suggests that there will be a re-acceleration of growth during Quarter 2.


In Europe the Purchasing Managers Indices were stronger than expected in April, with the manufacturing index moving to 53.3 (anything over 50 represents expansion). The incoming new business index increased to a new high of 52.5 and although business expectations in Europe declined (from 65.1 to 60.9), it is important to note that this index still continues to sit at a high level.  For the overall Euro area the PMI data suggests GDP growth of around 0.4 per cent in Quarter 1 and 0.5 percent for the beginning of Quarter 2.


The latest GDP data for the UK (showing 0.8 per cent growth in Quarter 1) highlights the robust nature of the UK’s recovery.  The domestic demand side of the economy continues to be strong and external demand has also improved.  For example during March UK car production jumped by 12 per cent due to the increase in demand from European markets. 

Indeed, it appears that the UK’s car industry is chiming to the same tune as the rest of the UK’s manufacturing sector.  Last week the CBI’s industrial trends survey reported that in quarter one this year business optimism in the UK manufacturing sector rose to the highest level since 1973.  The survey also revealed that business investment intentions have risen too which bodes well for the re-balancing of the UK’s recovery. 
With unemployment now having fallen back to 6.9 per cent in the UK and inflation falling back to 1.6 (the lowest level for four years) it is no surprise that consumer confidence levels continue to rise.

Northern Ireland

In the Northern Ireland economy things are continuing to improve too - albeit at a slightly slower pace.  Although unemployment data for the December-February period rose to 7.7 per cent, we have nonetheless heard of some significant job creation announcements this month. These include the creation of over 1,000 new jobs at Concentrix in Belfast as well as a further 333 jobs created in the North West (which came as a result of a large announcement by the US-based company Convergys Corporation). 

Local household confidence levels in Northern Ireland have improved too – with Danske Bank’s quarterly survey showing sentiment levels are now at their highest level since 2008. 

A further vote of confidence in Northern Ireland’s economic potential came along in early April with the purchase of NAMA’s entire NI portfolio by the American giant Cerberus Capital. 

All in all, April was a good month for the private sector in Northern Ireland – let’s hope May continues in the same fashion!

The content of this section is provided for information purposes and does not constitute professional or other advice

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