Today’s CSO readings are good news and should be seen in their recent historical context.
News headlines are pointing to the ‘domestic’ part of the economy experiencing an uptick. Let’s look at final domestic demand as one measure of this. The two figures below bear this out, with the latest data coloured in red, and the series indexed to 2008 Q1, the peak of final domestic demand. The first plots out the movement from 2002 until 2013 Q3, the second from 2010.
The clear uptick can be seen, but the economy is obviously still fragile and the uptick, in the context of a rather demand-depressed economy, shouldn’t be overstated.
13 replies on “Domestic demand in historical context”
Useful.
Yes – no overstating – one can experience an infinite number of upticks on the way down.
Seems a bit early to even say that the uptick is “clear”. This looks like the 8th quarter in which final domestic demand has gone up out of 21 since the peak in 2008. It simply isn’t possible to tell whether it is a real uptick (fragile or otherwise), a matter of bouncing along the bottom, or even noise around a continuation of the downward trend. Hints of confirmation bias here.
What are the units of demand?Euros?
@Ciaran, the units are in millions of euros, seasonally adjusted, in constant market prices. I’ve indexed the values to make the trend clearer. Data are from the cso.ie database:
@Stephen
Very interesting. The first diagram suggests that final demand has only fallen to Q3 2004 levels….Is that correct? If so, hardly the calaminatous collapse that everyone has assumed for Ireland. Doesn’t square easily with all the commentary.
@Paul W. The population now is more than 10% greater than in 2004, so the decline is significant unless the data were adjusted for this.
Dearg
Thanks. If that is all it is, this week’s strong Q3 GDP results driven by domestic consumption are genuinely good (or at least better) news.
In Germany in Q3 (July-Sept.) incomes fell 0.3% Y over Y.
This does not augur well for the ROE.
@Stephen
What are the primary components of final demand? Any breakdown available?
Answering my last question, I came across this which throws some light on composition…..albeit old data, published though March 2013. Still, the composition issue is addressed.
http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2009/supplyuse_2009.pdf
David McW’s article in the Irish Independent today was quite good and even mentioned final demand /consumption!
It somehow feels (online) that Ireland is again forgetting about the likelihood /probability of external shocks. Good article from AEP here on Turkey /0the Turkish Lire……if this continues, contagion may occur (highly likely) and that will force market interest rates higher….10 yr US treasuries breached 3pc on Friday…..then exiting the Troika program will not be so positive!
http://www.telegraph.co.uk/search/?queryText=Evans+Pritchard+&Search=
Continuing that theme, here is another good one from the Telegraph’s Liam Halligan
http://www.telegraph.co.uk/finance/comment/liamhalligan/10540402/Liam-Halligan-The-worrying-threats-that-stalk-global-growth.html
The $ is also reacting with volatility to these developments….but generally strengthening…..to be expected over the medium term…..also signals potential higher interest rates of course.