Courtesy of the Central Bank of Ireland released last week:
Changes in Loan Demand from Enterprises
Key: 1= Decreased considerably, 2= Decreased somewhat, 3= remained basically unchanged, 4= increased somewhat, 5= increased considerably.
Top of the line analysis: the patient is still in a comma:
- Fixed investment (long-term investment in capital and technology) is flat two quarters running. One quarter (Q4 2012) pick up has barely brought us back 1/3 of the way for Q3 2012 contraction and on cumulated basis, we are - in Q2 2013 still below Q1 2012.
- Inventories and working capital demand is flat in Q2 2013, so no short-term build up in either on foot of any sort of positive expectations forward. Cumulated corrections up in Q3 2012 and Q1 2013 are not sufficient to compensate for declines in Q1-Q2 2012. Conclusion: we are still worse off on inventories and working capital demand than in Q1 2012.
- Debt restructuring demand is flat on Q1 2013 in Q2 2013. The only game in town when it comes to credit demand from the corporates in Ireland is for debt restructuring.
The above does not bode well for the story about pick up in business expectations and flies in the face of the PMIs-signalled 'improvements' in both current conditions and forward outlook. Any early-stage expansion will have to be consistent with increases in demand for Inventories and Working Capital finance, while Fixed Investment will have to pick up if the businesses are expecting significant uplifts out 12 months.