Patchy Irish data dampen Barroso's sunnier outlook

DUBLIN (Reuters) - Irish retail sales fell for the third month in a row and house prices pointed to an uneven and slow recovery, dampening hopes expressed by the European Commission's President on Thursday that Ireland's economy is turning a corner.

Data released on Wednesday showed the jobless rate fell to 14.2 percent in the fourth quarter of last year, a more than two-year low, in a boost to hopes that Ireland's struggling domestic economy may soon begin to recover.

That prompted European Commission chief Jose Manuel Barroso, on a visit to Dublin, to say bailed-out Ireland was showing that the tough fiscal policies advocated by the European Union, but rejected by Italian voters this week, were working.

"Confidence is returning to Ireland and Europe, the Irish economy is turning the corner. The employment data just published suggest clearly that this could be happening," Barroso told a conference of company chief executives.

"It shows that the (bailout) programmes can work. It shows that there is light at the end of the tunnel."

While Ireland's economy returned to growth in 2011 and probably grew again last year, albeit at a slower pace, it has been driven by exports as the domestic side of the economy struggles due to high unemployment and relentless austerity.

A 1.7 percent month-on-month dip in retail sales in January, following a smaller fall in December which dashed retailers hopes that busier Christmas sales would spur activity, showed how cautious consumers remain in Ireland.

Irish house prices fell for the second successive month in January, dropping 0.6 percent month-on-month, and tempering hopes of a rebound after 50 percent peak-to-trough falls.

However prices in the capital Dublin, where much of the recent increase in purchases has been focused, rose 0.5 percent on the month and turned positive on annual basis for the first time since 2007 - indicative, analysts said, of the patchy nature of the stabilisation in the domestic economy.

"The general tone of the data over the last couple of days suggests an uneven and extended process of bottoming out in domestic activity," said Austin Hughes, chief economist at KBC Bank Ireland.

"The numbers for the past couple of days are telling you Ireland is in a different place to Spain and Italy, but it's not leaping forward. Even in success stories austerity has a cost in terms of the level of economic activity and spending power."

(Reporting by Conor Humphries and Padraic Halpin; Editing by Catherine Evans)

Source: http://news.yahoo.com/irish-retail-sales-fall-1-2-percent-january-113353003--business.html

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