The latest Eurostat data on industrial production and GDP are now available. GDP growth decelerated fairly sharply in 2010:Q3, down to 0.4% from 1% in Q2. As always the Irish data will only be available with a lag, which is unsatisfactory.
Industrial production was down 0.9% in September as compared with October, with consumer durables production leading the decline at 3%. A glance at the table shows how volatile Irish industrial production data are in comparison with the data elsewhere, implying that the monthly data are not informative for this country. The annual recovery in Irish industrial output has been quite respectable, however.
The implications of this deceleration for the Eurozone periphery are too obvious to need spelling out, although the FT does so here.
20 replies on “Latest EU GDP and industrial production statistics”
What an appalling testament to the management of the country. Latvia, Lithuania, Cyprus and most of the European states in positive territory since Q3 2009. Ireland will certainly be negative but we can’t even produce the figures. In addition the figures on monthly production are so unreliable, they should simply be binned.
Still Germany doing so well that it is hard to believe. It is certainly not in their interest to rock the European boat.
Although you are correct in saying that monthly variations in industrial output in Ireland are not informative (way up in July, down in August, back up in September), the year-on-year industrial output figures for Ireland, averaged over the 3-month period July, August, September are very informative. They are more than respectable, the word you use, they are brilliant. They show industrial output in Ireland up by about 11.5pc over July, August and September 2009. Describing this as respectable is like saying that a soccer team who win a match 11-0 have achieved a respectable scoreline. Technically true, but hardly an adequate description. Barring some unforeseen catastrophe in Q4, the year-on-year increase in October, November and December may well be a lot higher because seasonally-adjusted industrial output in Ireland fell in Q4 2009 over Q3 2009. It wouldn’t surprise me if we get close to a 20% year-on-year increase in industrial output in October, November and December.
The increase in Ireland in July, August and September is the highest in the EU15. It is just above Sweden and Germany, but no other country comes close. Grouping Ireland with Greece and Portugal is daft. In both of these, industrial output is down year-on-year, as it is in some non-Piigs countries.
Back in late September, the Central Bank forecast in its quarterly bulletin that industrial output in Ireland in 2010 would rise by just 2.6% in full year 2010 over 2009. I posted on here that this forecast was among the worst I had ever seen, and predicted around 10%, if I recall correctly. Clearly, on the basis of these figures, my forecast is looking pretty good, while the Central Bank’s forecast is like I said it was at the time, total nonsense. If anyone wants to bet with me that the Central Bank forecast will be more accurate than mine, I will be very happy to do so.
Also informative are the figures given towards the end for the industrial output index in September. These are given to base 2005=100.0. Ireland’s index in September was 111.8, meaning industrial output in September was 11.8% higher than in 2005. Again by far the highest in the EU15. Germany was at 104.7, Finland at 102.3, Netherlands at 101.0. All the other EU15 countries were below 100.0, meaning industrial output in September was still below its 2005 level. Particularily striking is the UK figure, just 90.7. In other words, the UK has devalued its currency by near 20% in that time, supposedly to bolster competitiveness, but in the process triggering an inflation spiral, and yet its industrial output in September was 9.3% lower than in 2005, while Ireland’s was 11.8% higher. These are the sort of facts that the economists in the Dept of Finance should be hammering home to lift the pressure in the bond markets. Why aren’t they? At the very least, they should be earning the money the taxpayers pay them by writing a letter to the FT pointing these facts out.
And before any of our viagra-obsessives come on and post that Ireland’s rise in industrial output was caused by viagra, no it wasn’t. I posted figures on another thread earlier in the week showing clearly that it wasn’t.
Regarding the Q3 GDP figure for Ireland, unlike many economic forecasters, I do not pretend to know what it will be. All I can do is expound the facts as they are known at this moment. In Ireland GDP rose by 2.2% in Q1 and fell by 1.2% in Q2. The difference was caused entirely by changes in the ratio of export volume growth over import volume growth. In Q1 exports rose a few per cent more than imports. In Q2 imports rose a few per cent more than exports. It all depends on whether Q3 is closer to Q1 or Q2 in this respect. So far, we have only the monthly merchandise trade figures for July and August published. These showed exports increasing by quite a few per cent more than imports. So, to the extent that limited data is currently known for Q3, it is shaping up a lot more like Q1 than Q2. However, no figures are ever published for services exports and imports until the day the GDP figures themselves are published, so until then we don’t know for certain if there could be a reverse trend in those that cancelled out the clear improvement in Q3 in the ratio of merchandise export volume growth over merchandise import volume growth. It is unlikely, and so the omens for strong GDP growth in Q3 are looking good, but it is not impossible.
Obviously austerity alone isn’t going to work for the EZ. The ECB needs to get the finger out. Maybe Michael Burke will get a fairer hearing here …
Shouldn’t we be prudent about extrapolating from data on the overwhelmingly FDI dominated Irish manufacturing sector?
As I noted on another thread, the pharma/medical devices sector accounts for more than 50% of merchandise exports; these sectors are highly capital intensive, have a high import content, and only employ 40,000.
So the impact of rising output and exports on the Irish economy is limited.
On the services export side, pharmaceutical companies park patents in Ireland to take advantage of the tax exempt status on patent income.
This enhances the export figures but what benefit accrues to Ireland?
@Mr Finfacts
yes Jto’s prolixity is directed towards the employment-lite manufacturing sector. He says nothing about construction and construction-related activity; these latter sectors account for north of two thirds of the total rise in unemployment since the peak of the cycle. He says relatively little about domestic demand; his focus on manufactured exports keeps his attention elsewhere, but domestic demand is weak, anecdotally looks to have weakened further (a lot) over the oast 6-8 weeks and isn’t going to get an awful lot of help from the 6bn un-stimulus (also called the budget) next month. We had better hope that the fiscal multiplier is as low as some claim.
JtO’s determination never to speak badly of the Irish economy is curious; his calls to sack people whose views he does not like (MK) is sinister. I guess it’s the primitivism/tribalism thing up north.
The Irish economy is wha it is: exports are doing well, things domestic are struggling, but probably not as bad, outside construction, as the doomsters would have us believe.
The anecdotal thing: it looks like Dublin (at least) property prices have taken another dive (in admittedly thin volumes); at risk of a silly guess, I’d say our savings rate has shot up a few percentage points as budget frenzy has built. Spending decisions have definitely been suspended/cancelled.
@simpleton
Spending decisions have definitely been suspended/cancelled.
JTO again:
If that is true, and I will take your word for it, then it means that things are going to plan. Not my plan, or the government’s plan, but the plan of the doomsters you refer to.
Anyone see this on BBC:
http://www.bbc.co.uk/news/business-11750676
Ireland ‘in preliminary talks with EU on bailout’
BBC are reporting: Ireland ‘in preliminary talks with EU on bailout’
@Michael Hennigan
As I posted on another thread, 16 of 28 sectors in manufacturing showed large increases in output in September. Even traditional industry recorded an increase of 6.5% or so. The idea that it is all just viagra is nonsense.
@simpleton
his calls to sack people whose views he does not like (MK) is sinister.
JTO again:
Wrong!
There are lots of economists on this site, whose views I don’t agree with, eg Karl Whelan, whom I would not want to see sacked.
The difference with Kelly is that, motivated by his overwhelming longing to see FF driven from office, he is deliberately and maliciously trying to damage the economy, and taxpayers are having to pay for him to do this.
BTW, have you any concrete evidence that ‘domestic demand has weakened further (a lot) over the oast 6-8 weeks’, even if it is anecdotal? I am not disputing what you say. Given the whipped-up media panic in the past 6-8 weeks, I would not be at all surprised if what you say is correct. That, after all, was the intention. But, I like to keep up with the stats and, obviously official stats take a few months to be published, so they wouldn’t reflect this yet. But, if you have some concrete evidence, I’d be interested in knowing what it is. Doesn’t matter if it is just anecdotal. The October figures for tax receipts and the October figures for new car sales, just about the only figures we have for as up-to-date as October, while still very weak, don’t show any sign of a ‘further weakening’, but obviously that could be just because they are based on sales that took place or were decided on back in the more optimistic summer time and so wouldn’t be showing any sign of a ‘Kelly effect’ just yet.
@JtO
As I said, it is anecdotal, but it is sourced from Estate Agents who, for what it is worth, have told me that they have seen double digit % price drops in past month (I said in thin markets); talking to retail bankers who state that what little business was being done has suddenly evaporated; my son’s soccer team, half the parents are milionaires, cancelled the Easter trip to Europe ‘because of the forthcoming budget’. The ultimate anecdote, the taxi driver, consistent with all the above.
I have seen zero evidence that MK is trying to damage anything; quite the reverse. I find your claim to be contrary to the evidence, something you often accuse others of. Who could possibly gain from weakening the economy further? And could MK really achieve this all by himself, even if he really wanted to? One newspaper article?
You say that your remarks were not sinister. Sacking somebody simply because they say something violates principles of free speech; it is something that belongs in a fascist regime; something that comes naturally to tribalists; anathema to democrats. Enlightenment politics, which never quite made it to your part of the world, values free speech quite highly.
I would actually agree with JTO here in that infrastructure plans should not be put on ice – where perhaps I disagree with him is the nature and type of these investments.
Housing is over supplied this side of armageddon and we can survive on second hand imported cars so therefore there is no need for consumer oriented credit institutions anymore.
Road building should be stopped immediately as there is again huge overcapacity here.
Again I repeat we need a clean industrial bank up and running immediately supplying cheap credit for strategic goals – we have the deposit for this.
Using the goverment books here is a non runner given the fiscal fetish that our European overlords have with Goverment funding.
Lets game the system – everybody else is but we are so ashamed of ourselves we seem now unprepared to stand up and create credit.
@ JTO
As you have noted before, predicting the future is difficult.
Yet despite this, Morgan Kelly has called the property collapse, called mass unemployment, he called the bank problems , which has now ,it seems (bbc is reporting a bailout) forced us to ‘rely on the generousity of strangers’.
Set against this, he was wrong, in that property prices have not fallen 80% from peak, not yet anyway, though given interest rates will rise, credit wont be expanding anytime soon, I wouldn’t buy a house any time soon, would you?
He was wrong in stating unemployment would rise to 20%.
On balance he has called the major events more accurately that anyone else I’ve read. I don’t buy this ‘talking down the economy’ rubbish.
I am a fan of your analysis yet you are coming across a bit like Bertie Ahern on this MK issue. Though I’d be confident you have more respect for the victims of suicide.
@ JohnTheOptimist
I said nothing about viagra; just stated a relevant fact about the dominant export sector.
Food and beverages are important for indigenous sectors for example but the FDI sector is responsible for about 90% of tradeable goods and services exports.
It may also be an inconvenient fact that exports rose in current price terms by 50% in the period 2000-2009 but employment fell.
In 2009, employment in the indigenous and FDI tradebale goods and services sectors fell to the 1998 level.
I would prefer to present more optimistic data.
It’s good of course to see any sector’s output and exports increase
Why is cost competitiveness always centered around wages and tax arbitrage in this neoliberal world.
It seems the CBs are intent to drive up the cost of commodities so that they can reverse their disastrous adventure in Industrialising China and others.
This will have catastrophic effects on the Chinese consumer given the fact that they are still so much poorer then westerners.
Also more importantly for us heavy industry will start to move back to the west as wages in real terms become more competitive due to QE and also the oil cost of shipping products along a extended supply chain becomes onerous.
Ireland will never contain much heavy industry but we could start making preparations to develop a indigenous light manufacturing base here – this will still require cheap input costs such as electricity so therefore our capital creation should be directed towards ESB and the like.
We should in effect be making strategic decisions on the assumption that globalisation as we have known it is dead – it is only a matter of time before the dollar QE will rise oil over $150 again making all the excess capacity in Asia useless – we can supply Europe with cheap goods from cheap labour if we eliminate our private debts and also make efforts to rejig our electricity and heating and agricultural costs and network.
@simpleton
Enlightenment politics, which never quite made it to your part of the world, values free speech quite highly.
JTO again:
I think you will find that Enlightenment politics made it to my part of the world a long time before it made it to other places in these islands or in Europe. Ever heard of The United Irishmen? My part of the world was also highly industrialised by the 1860s, when very few places were, certainly none south of what later became the border. We had the largest shipyard in the world in the early 1900s and built the largest ship in the world in 1911, while the rest of the island was totally unindustrialised. The ship did sink to the bottom of the Atlantic, of course, just as David McWilliams and Morgan Kelly predicted at its launch that it would. Even so, the industrial powerhouse that was my part of the world from about the mid 1800s to the mid 1900s has never been matched anywhere on this island before or since. What is your part of the world, by the way? Lets see how Enlightened it was in 1790 compared with Belfast.
Regarding your anecdotal evidence, it isn’t a lot, but I certainly don’t dismiss it. As I said, there has been such a whipped-up media panic in recent weeks that I would not be the least surprised to find that what you say is correct. That was the intention behind the whipped-up media panic, so there is at least a chance it succeeded. We shall just have to see when the economic data for October and November comes out. The October PMIs for manufacturing and services, which came out last week, both showed an improvement in October. These PMIs are supposed to pick up these trends almost instantly. But, there may be a couple of weeks delay in processing their results. So, if the ‘further weakening’ you say has occurred only occurred towards the end of October and into November, the October PMIs may not have picked it up, and your conversation with the taxi driver may well have been the first indicator to come out that detected this ‘further weakening’. Someone has to be the first, so why not you?
@JtO
As with my anecdotal evidence, so my understanding of the Elightenment is limited. But, I do understand it to mean, at least in part, the application of reason to human affairs, in place of superstition and fairy tales, particularly of the religious kind. As I understand it, in your part of the world, religious wars continue to the present day, evidence of unreason.
I think you will find that the reason for your industrialisation had more to do with who colonised rather than enlightened you. Whatever did the British do for us? Who can eat Georgian architecture and a railway system? You just got a different kind of prod, one that built ships.
The application of Reason to the issues of the day would quickly reveal that nobody in the commentariat has either (a) an incentive or (b) the ability to produce any kind of economic outcome, not least a negative one. You forever inject causation where there is only correlation. Such behaviour – the first refuge of the statistically illiterate – does not sit easily with Ireland’s Greatest Living Statistician. Or should that be Forecaster?
Anecdotal evidence, by its very nature is never ‘a lot’. Ireland’s Greatest Living Numbers Man should occasionally deal with the whole economy data, not just manufacturing exports & pmi’s. You studiously ignore all of the component of domestic demand that, when added up, paint a vey subdued picture.
Some people simply refuse to live in the real world!
The EU exists. It is designed to destroy borders, OK? That has clear consequences for the periphery. Really, is it rocket science?
Population will move to the centre.
Capital will move to the centre.
Jobs will too.
The corrective mechanisms are the CAP and regional funding. These will be done away with. Ireland’s goose will be cooked.
Except that, like Norway, but with a population half the size, Ireland has an enormous maritime economic zone! Will we simply copy Norway? We are half way there already. Oil is abiotic in origin and methane is often untransformed but trapped under impermeable structures. It is there to be found, but the Irish prefer to suck the thumb!
Enormous amount of land and sea per head of population! Wonder why there is an economic war going on?
I am pessimistic because of failure to lead. Magic thinking. Haughey politics! But Ireland could be another Australia!
@simpleton
You are totally incorrect and misinformed about my part of the world. There has never been a religious war there. There have been several rebellions in the past couple of centuries against the British Crown. You might be confusing those with religious wars, especially if you have relied on the Dublin 4 media or Dublin 4 academics, like Conor Cruise O’Brien, for your information.
BTW, what part of the world do you come from? I might be totally wrong, but I have a vague memory of reading months ago one of your posts here, where you said that you were from America? Deepest apologies if I got that totally wrong and confused you with someone else. I am very pro-America myself, and go there regularly on business. But, given the history, someone from America isn’t in a position to lecture someone from my part of the world about rebelliing against the British Crown, since America was quite prone to do that as well, and more successfully. All irrelevant, of course, if I confused you with another poster, and you aren’t from America at all.
Back to the economy. I certainly do not ignore domestic demand. It is one of my main themes and I have many posts on it. I have repeatedly posted that the deluge of negativity about the economy, emanating from the Dublin 4 media and from certain Dublin 4 economists, is depressing domestic demand. And, moreover, is intended to do so. Clearly there is now a 2-speed economy. The export-oriented manufacturing and services sector is performing brilliantly. As Kevin O’Rourke’s figures show, its output is rising faster than in any other EU15 country. I am lucky enough to work in that sector myself (not just in Republic of Ireland, my work is spread over all these islands). Our business is booming. My Christmas bonus this year will be double last year’s. And I’m not alone. According to the Irish Times, Google Ireland last week announced a 10% increase in salaries, so good is business currently. In contrast, as you correctly say, the sector dependent on domestic demand is as flat as a pancake, apart from new car sales. However, it is wrong to dismiss the export sector as a small part of the economy. Ireland has one of the most open economies in the world. Exports are over 100% of GDP. If exports grow rapidly, the economy will grow moderately rapidly, even if domestic demand is flat. Naturally, it would be much better if domestic demand grew rapidly too, in line with the export sector. If exports continue to grow rapidly, that will eventually happen (although I don’t know when), since continued rapid growth in exports will eventually discredit the Morgan Kelly analysis of the economy and eventually lift consumer confidence and spending (although God knows when).
Regarding members of the commentariat not wanting a negative outcome, you are wrong. Some clearly do. Brian Lucey has allready posted on this site that he wants to see the economy crash, as he sees such a crash as a catalyst for the change in governance that he desires. Any marxist economist or marxist journalist worth his salt will, of course, want the same outcome too. Don’t tell me there aren’t lots of them in the Irish media and academia.
And, finally, I do not and never have claimed to be a great statistician, numbers man, or forecaster. I am very average in all these. THe most I ever claimed was to be better than the Dept of Finance, the Central Bank, and ESRI. But, that’s because they are abysmal. Claiming to be better than them is about as boastful as claiming to be better-looking than Brian Cowen.
Does the big variation in recent Irish % monthly industrial production growth rates, compared to near-static % changes from the previous year indicate some seasonal pattern that has repeated recently?
It is also interesting that some of the highest sans-construction industrial production indices relative to 2005 = 100 are in the troubled states (Portugal, Ireland, Greece). Perhaps this indicates that these countries still have room to fall, or that their high production growth rates post-2005 generated financial instability, or were generated by financial excesses.
I am not sure what interpretation to place upon some of these odd patterns in this data.
Since the vast majority of Irish industrial production is for export, I don’t see why it should fall further. The only problem in the present environment is a lack of credit, labour and other inputs are cheaper than in recent years.