Ireland, the fastest growing economy of the European Union, has gone from strength to strength in the past few years. The Irish labor market remains tight currently as its unemployment is near a 10-year low. Also, the EU has been upbeat about the growth prospects of the Irish economy in the years to come.
Finally, business conditions have kept improving and Irish wages have been boosted by tight labor conditions. Such favorable conditions call for investing in stocks from Ireland.
Unemployment at a 10-year Low
For the first time in as many as 10 years, the overall jobless rate in Ireland swooned to below 6% in April. Per the latest report from the Central Statistics Office on May 1, the unemployment rate fell to 5.9%. The metric was last around this level in 2008, just before Ireland’s economic crisis.
The jobless rate has been on a steady decline since the country’s finance department projected in April that by the next year, the Irish economy would witness the unemployment rate falling to as low as 5.3%. The body also stated that after this, joblessness would hold steady at that level till 2020, while the economy makes its way to full employment.
Coming to the statistics, the seasonally adjusted rate for the current level of unemployment fell even below the revised rate of 6% in the month before and 6.8% in April last year. The total number of persons who were left unemployed within Ireland stood at 140,300, lower than 143,500 persons in the month earlier. Also, in the past 12 months, 16,700 persons got jobs.
Irish Manufacturing Activity Gains Traction
Manufacturing activity in the European country gained momentum in April after a period of lull in March due to weather-related disruptions. Last month, a snowstorm in Ireland — the ugliest in last 36 years — forced the closure of business activity across the country. This led to Purchasing Managers' Index falling to 54.1% in March, its 12-month low.
However, post resumption of business in the country in April, the Investec factory Purchasing Managers' Index surged to 55.3%. Further, business conditions within the Irish economy have steadily improved for the last 59 months. A reading above 50 indicates economic expansion.
EU Raises Its Growth Forecast on Ireland
In its Spring 2018 European Economic Forecast, the European Union (EU) raised its growth forecast for the Irish economy. The body stated that the country would continue to experience strong GDP growth in the next two years.
The commission remained upbeat on the prospects of the Irish economy and forecast that in 2018, Ireland’s GDP will surge 5.7% and 4.1% in 2019. Such growth would be achieved on the back of a rise in household spending boosted by an increase in wages. Further, continued investment in construction would also ensure that the economy remains robust in the years to come. Rising employment would drive wages higher and low levels of inflation would boost consumer spending.
4 Best Choices
Ireland’s unemployment rate has fallen to a 10-year low even as the economy keeps growing consistently. This indicates that the country would remain EU’s fastest growing economy for some time to come. Further, manufacturing activity in the country has also gathered steam in the last month. Finally, business conditions have kept on improving for almost 60 months on the trot. Such favorable conditions make Ireland’s stocks a hotbed for money.
In this context, we have selected four stocks that are expected to gain from these factors. These five stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seagate Technology plc (STX - Free Report) is a provider of data storage technology and solutions to clients across the globe.
The company is based out of Dublin, Ireland and sports a Zacks Rank #1. The expected earnings growth rate for the current year is 28.49%. The Zacks Consensus Estimate for the current year has improved 18.2% over the past 60 days. Seagate has gained 51% in the past six months.
Grafton Group plc Grafton Units (GROUF - Free Report) is a provider of merchanting, retailing, and mortar manufacturing services.
The company is based out of Dublin and carries a Zacks Rank #2. The expected earnings growth rate for the current year is 8.90%. The Zacks Consensus Estimate for the current year has improved 1.3% over the past 60 days. Grafton has gained 55.8% in the past six months.
Ingersoll-Rand Plc (IR - Free Report) is a designer, manufacturer and seller of industrial and commercial products.
The company is based out of Swords and has a Zacks Rank #2. The expected earnings growth rate for the current year is 17.21%. The Zacks Consensus Estimate for the current year has improved 2.3% over the past 60 days. Ingersoll-Rand has gained 4.4% in the past six months.
Alkermes plc (ALKS - Free Report) engages in researching, developing and commercializing both pharmaceutical and bio-pharmaceutical products.
The Zacks Rank #2 company is based out of Dublin. The expected earnings growth rate for the current quarter is 300%. The Zacks Consensus Estimate for the current year has improved more than 100% over the past 60 days.
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