Ireland’s exports have decreased slightly in March 2011 compared to February, but the trade surplus has increased following a decline in imports. Figure 1 shows how Ireland’s trade surplus has been historically widening since the Celtic Tiger period of economic growth from the early 1990s onwards. This has continued to widen in 2011 as shown in Figure 2. The fall of 6% in monthly exports between February 2011 and March 2011 was offset by a fall in imports of 15% over the same time horizon. This resulted in a 3% increase in Ireland’s trade surplus in March 2011.
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The latest figures released from Eurostat indicate that Ireland’s construction demise has been among the worst of all the EU-27 countries. Figure 1 shows this decline compared to the European average and some other selected countries. Using 2005 as the base year of 100, Ireland’s construction output has fall by 73%. This fall is far in excess of the European average which has seen a fall of only 13%. And while the Euro Area has been more adversely effected than the rest of Europe this has only fallen by 18%. Germany’s construction output is actually higher in Q4 2010 than in was in 2005 while the UK has seen improvements in construction output throughout 2010. These figures indicate that while Ireland is not the only country to be adversely effected through a collapse in the construction industry, we appear to have suffered more than most. Perhaps indicating the extent to which the construction industry in Ireland had overheated.
In light of the visit by the Queen to Ireland it is interesting to consider the interconnectedness of the Irish economy and the economy of the United Kingdom (UK). In terms of visits to Ireland by people from the UK we can see in Figure 1 that this has been increasing steadily from the mid-1980s (with the usual seasonal variation associated with tourism). However, must likely due to the recession this upward trend has been slightly abated since 2008. In terms of merchandise trade, Ireland is also becoming more interconnected with the UK (see Figure 2). Since the 1970s our trade with the UK has increased exponentially, peaking during the end of the 1990s at the height of the Celtic Tiger and declining slightly during the construction bubble phase of the economy. However, despite this decline in the latter part of the last decade, the UK remains Ireland’s largest export market. These two graphs are just an example of the interconnectedness of Ireland with our nearest neighbour and show how important the UK economy is for the Irish economy as a customer base for our tourism industry and also as a destination for our exports.
The total number of new car sales in April 2011 was 11,171, up 15.1% from 9,599 in April 2010. As can be observed in Figure 1 there has been a month on month continual increase in new car sales in 2011 compared to 2010 and 2009. However, April 2011 new car sales are still 36% lower than they were in 2008 and 48% lower than they were in 2007. April new car sales are also lower than January, February and March car sales. This is typical given the seasonal variation associated with car sales in which most purchases occur at the start of the year.
The latest index of house prices released by the CSO shows that house prices have continued to fall up to the end of March 2011. This decline has shown no slowdown with prices falling by an average of between 1% and 2% a month from their January 2005 price. While someone who purchased their house in January 2005 could have sold it at the height of the boom for an average price increase of 30.5%, the property is now worth an average of 21% less than the 2005 price paid. This is highlighted in Figure 1 below. Interestingly, when you look at Dublin versus the rest of Ireland it is possible to see that while prices rose faster and higher in Dublin prior to 2007, post recession prices have fallen faster and lower than the rest of Ireland. This may be due to the excessive development of apartment complexes in the Dublin area during the construction bubble, providing a large degree of excess supply which would have to be absorbed before prices begin to rise again.
Consumer prices increased again in April, with a rise in prices of 0.4% during the month. This means that in total the consumer price index indicates that between April 2010 and April 2011 consumer prices have increased by 3.4%. This is a substantial increase, and a strong turn around from the deflationary process experienced post-2008 recession. When we look at what the drivers of the higher inflation rate are we can see that Housing, Water, Gas, Electricity and Other Fuels experienced the largest increase in price. This was followed by approximately 4% increases in Health, Transport and Communications. However, these were slightly offset by falls in the cost of Clothing and Footwear and Furnishing Household Equipment and Maintenance. Overall, these price increases are occurring in a lot of places where consumers would find it hard to cut back. For instance the costs of fuel for housing and health care. Likewise, increases in the cost of transport would have an impact through a number of channels on consumers.
A recent report by Forfàs indicates that Ireland’s innovation performance is growing strongly. According to data from the EU wide Community Innovation Survey (CIS), displayed in Figure 1 below, Ireland is ranked 7th out of all EU member states in terms of the proportion of firms which perform technological innovation. The report defines a technological innovation as the introduction of a process or product innovation and discounts organisational or marketing innovation. Germany leads in terms of the proportion of firms engaging in technological innovation; with 63.8 percent of firms reporting that they introduced a new technological innovation during the reference period 2006-08. When considering organisational and marketing innovation (defined in teh report as non-technological innovation) it can be observed that Ireland is ranked 8th out of the EU countries. However, when analysing the effective commercialisation of these innovations Ireland’s performance falls down. Figure 2 displays the proportion of turnover derived from new to market and new to firm process innovation. It can be seen that Ireland’s position is quite low down the rankings and indeed it has even fallen since 2006. This fall may be unsurprising given that the total turnover of a substantial proportion of firms has fallen. The proportion of turnover derived from product innovations can be used to assess whether new innovations are perhaps more resistant to downward pressure on sales than traditional, older products. However, the data presented in the Forfàs report fails to provide support for this; instead suggesting innovation sales have fallen.
This suggests that Ireland may not be capitalising on the innovations it introduces. We are introducing new products, processes, organisations and marketing changes at a rate almost matching the EU leaders, however, when it comes to commercialising these innovations we are falling behind. This may suggest more of a role to play for government support in getting innovations to market and ensuring that the innovations achieve access to the desired markets to support growth. Ireland is to get a reduction in the loan rate from the EU/IMF bailout package of approximitly 1% according to BBC news.
This reduction would be worth over €400 million to Ireland over the duration of the loan. It comes after lobbying from the Irish government since the recent elections. It should strengthen Enda Kenney's position and allow him to claim that he is fulfilling the promises he made in the build up to the elections that he would re-negotiate the loan rate. The latest release from the CSO’s live register suggests that unemployment (as measured using the Quarterly National Household Survey Methodology) is holding steady at 14.7%. However, the live register figures which were released by the CSO, while not precise measures of unemployment as they account for people who are engaged in part time employment and seasonal and casual workers, can provide an insight as to what is happening within this 14.7%. Using the live register it is possible to gauge general trends in the labour force. Here we will break the live register down by gender, age and previous occupations. Figure 1 shows that the majority of people represented on the live register are males. This is unsurprising given the predominance of male workers in the construction industry prior to the collapse in this sector of the economy in 2008. Males now make up almost 75% of those registered on the live register. Figure 2 shows teat the proportion of those on the live register aged under 25 is remaining constant at approximately 25% of the total number of the live register. This suggests that the recent increases in the number of people on the live register derive from individuals aged over 25. Interestingly, when we break down where people worked before signing onto the live register we can see a marked difference between male and female workers. Figure 3 and 4 show that for males most individuals are signing onto the live register from Craft and Related industries while for females most individuals are signing onto the live register from sales and personal and protective services.
This is a copy of the slides I presented to the 3rd Business Statistics Seminar held by the CSO on the 23rd of March 2011 in Dublin Castle. The presentation focuses on sectoral differences in innovation performance. The results indicate that for two types of innovation (new to firm and new to market product innovation) the drivers of innovation vary dramatically across sectors. However, for organisational and process innovation there is no significant difference in the drivers of innovation performance. The paper points to the need for more focused innovation support from policy makers and emphasizes that a one size fits all policy is not appropriate. Doran and Jordan 23 3-2011 View more presentations from doran_justin |
AuthorJustin Doran is a Lecturer in Economics, in the Department of Economics, University College Cork, Ireland. Archives
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