CSO Data Releases

For the first three quarters of 2014 GDP is running 4.9 per cent ahead of the equivalent period in 2013. GNP is up 4.7 per cent on the same basis.  Quarter on quarter growth has slowed through the year though much of this is likely the result of distorting effects from the MNC sector.

The “contract manufacturing” effect that influenced the quarterly figures at the start of the year seems to have continued into Q3.  This seems to be supported by the Industrial Production data which includes this “contract manufacturing” effect and is highly volatile at the moment.  After rising by over 20 per cent in the first half of the year the volume of industrial production in manufacturing industries fell by 5 per cent in Q3 so remains at the elevated levels.  The figures show that the effect is arising in the pharmaceutical sector.

The Q3 balance of goods trade in the national accounts was around €3 billion higher than the balance shown by the Trade Statistics figures.  The difference was around €2.5 billion in Q2.

In the first nine months of 2013 the national accounting adjustments for goods trade resulted in a difference of just –€76 million between the trades balances recorded in the national accounts and trade statistics.  For the first nine months of 2014 the balance of goods in the national accounts is €7.9 billion greater than that shown in the trade statistics.

The current account of the balance of payments showed a massive surplus equivalent to 8.4 per cent of GDP in Q3.  This has been driven by an improvement in the merchandise balance (with no corresponding outflow on the services side) which is likely the result of the “contract manufacturing” effect discussed above.

It is possible (i.e. this is a guess) that the “contract manufacturing” effect is arising in an Irish-domiciled company.  If it was the Irish-resident branch of an MNC the profits would be recorded as an outflow in the BoP (and also for GNP) in the same quarter they are earned.  If it is an Irish-domiciled (or headquartered) company the profits would not be recorded as an outflow until a cash dividend is paid (assuming those dividends are paid to non-resident shareholders).  It is not appropriate to say that GNP excludes multinational sector profits.

[As an aside one might consider what impact, if any, these activities are having on Corporation Tax revenues.]

 

In November, consumer prices fell 0.3 per cent for the second month in a row (there was also a fall of 0.2 per cent in September).  Annual inflation is just 0.1 per cent.  Excluding energy products (-2 per cent) and mortgage interest (-12 per cent) inflation in the remaining 85 per cent of the index is around +1 per cent.

All charts from the CSO.

Comments

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26 thoughts on “CSO Data Releases”

  1. Another curious feature of the data (apart from exports) is consumer spending, which in volume terms is flat year over year in q3, having fallen in q2 and shown zero growth in q3. This sits oddly with the retail sales data and tax receipts on VAT and excise duty.

  2. Dan,
    My understanding is that the CSO does not measure on line retail sales . These prob represent. 10 % of vol and are growing at 15% if the UK is any guide. Bizarre if true.

  3. It is true that retail sales data does not include online sales but it would be the growth in the latter that would be relevant in looking at the change in consumer spending. The CSO must be assuming a big fall in spending on services. Also, tourist spending is subtracted from domestic spending to give the spending of Irish consumers (spending abroad by the latter is added on) but that is not a substantial factor.
    The latest UK data shows online spending a 11.2% of retail sales, with growth of 7.5%, although that is weaker than normal

  4. Dan,
    The home delivery food retailer Occado reported 17% reveneue growth in the year to October in the UK. So online types are going gangbusters.
    In the natational a/c, nominal consumer spending is up just over 2% y/y for the first 9 months while VAT & Excise are up about 6% over same period.

  5. The same story can produce quite different headlines:

    Irish Times: Irish economy grew by 3.5% in the third quarter

    FT: Ireland growth slows sharply to 0.1% in third quarter

    The higher goods exports evidenced in Q2 and assumed to be mainly tax related booking of overseas manufacturing in Ireland for tax purposes, remained at a high level in Q3 but there was not a significant change in net exports but as in recent quarters, in services and related Double Irish transactions, resulted in negative net exports.

    A few months ago The New York Times reported that until around 1999, overall economic growth or GDP tended to correspond with growth in earnings for middle-income Americans. Since then, the two have diverged sharply.

    On Thursday Eurostat published a report which showed that using actual consumption per capita (AIC), a better measure of standard of living than GDP, Germany was 22% above the EU average; France and Italy were at the average and Ireland along with Spain and Cyprus were below the average.

    That should not be surprising given the distortions in the data.

    http://www.finfacts.ie/irishfinancenews/article_1028547.shtml

    The CSO needs to be more specific about obvious distortions as otherwise the credibility of the data would eventually be undermined.

    In Q1 2015, two big tax inversions: the Medtronic and Actavis deals worth $109bn and involving almost 80,000 employees will mess up GNP and Balance of Payments data.

  6. All will be pleased to know that the record has been broken for the lowest number of posts ever on the Quarterly National Accounts thread. Just 5 (or 6 if mine is included) in the 35 hours since the publication of the figures. God be with the good old days back in 2009/10 when the QNA thread would have 278 posts within an hour of the publication of the figures.

    I think this is the best indication yet that growth is back with a bang. The silence of the doomsters is deafening. Wherefore art thou, Seafoid, DOCM, Ernie? I would miss you terribly if you went the way of former king-doomsters like Dreaded_Estate, Jagdip Singh, Simpleton, Robert Browne, Obsessive Freak, who disappeared out of our lives as soon as the growth figures proved their doom predictions wrong. They have left a void which no amount of economic growth can fill.

    WRT the figures, it looks like full-year growth will be between 5% and 6%. This is higher than the recent government, Eurostat, IMF and IFC forecasts. Q2 growth was spectacular. Q3 flat. The difference is down to manufacturing output which surged in Q2, but fell back a bit in Q3. That’s why I expressed a bit of pessimism about the Q3 figures in another thread last week. However, it surged again in October to way above its Q2 level. So, if November and December are anything like October’s manufacturing output figures, Q4 is also going to be spectacular. It looks as though both real GDP and real GNP in 2014 will be just 1% below their peak 2007 levels. So, they should easily surpass it (by a margin of 3-4% in 2015).

    The 5%-6% full-year growth figure is entirely consistent with other figures for PMIs, tax receipts, employment numbers, PPSN numbers, live register figures, Dublin Port traffic figures, job ad figures (Irish Employment Monitor), airport passenger movements etc etc. Those who are claiming the figures exaggerate growth have no evidence to back up their case. In particular, growth is estimated at 3% in the UK in 2014, yet its tax receipts are up only 1%. In Ireland tax receipts are up 8.5%, so how come its growth is being questioned? It is being claimed by some on other sites (not here) that the CSO are using dodgy export figures and greatly exaggerating the growth. The idea the the CSO don’t know how to calculate GDP and GNP growth is absurd. They employ the best statisticians in Ireland. It is true that different timings of outflows and inflows can significantly affect quarterly growth figures, either over-estimating or under-estimating growth. However, by definition, these are self-cancelling between quarters. When the growth continues quarter after quarter, the idea that it is all down to dodgy accounting practices is baloney. It should also be noted that the figures for growth in industrial output given in the QNA are much less than those given in the monthly industrial production releases (although following the same trend), which shows that the CSO is indeed taking into account things like contract manufacturing in its GDP/GNP growth estimates. It is also true that, as further information comes in, GDP and GNP growth figures are frequently revised. However, in 90% of cases, the revision is an upward revision.

  7. @ JTO

    The issue here is not the trend but its size and I would not presume that I could change what you assume to be facts:

    1) The Fiscal Advisory Council estimated that over 40% of the GDP rise in H1 2014 resulted from overseas contract manufacturing. John McHale and his team are not infallible like the Pope but I guess that they can handle maths;

    2) It would be foolish to believe that the accounts of faux-Irish companies with total payrolls of up to 600,000 would not impact the national accounts;

    3) Low paid tourism jobs and jobs in Agriculture, fisheries and forestry account for 64% of the jobs added since Q1 2011 – the CSO informed me this week that it is still investigating the fall of 27,000 in farming jobs in 2009 and the rise by 27,000 in 2013 when Census 2011 data was incorporated in the data. There was a marginal increase in income tax receipts compared with target in 2013.

    4) There were 451,000 on the Live Register and in activation courses in Nov 2014 – 21% of the workforce;

    5) Net emigration by Irisn nationals in 2009-2014 was 124,00;

    6) I had my first contact with the CSO in my first job. It’s a credit to the public service. This year my alma mater, Hamilton High School in Bandon won the John Hooper prize for statistics.

    HHS was unique in West Cork as a lay Catholic secondary school that was free after Donough O’Malley’s education reforms. In the once known “Londonderry of the South”, there was no Catholic order school.

  8. @ JTO

    Considering the number of times I have been at odds with Seafóid, not to mention Ernie, I wonder how you include me in their company, except, perhaps, because we often fail to agree with you.

    For the record, I am in strong agreement with MH on the issue of the overall reliability of the national accounts which are distorted, in a manner quite evidently still not understood, by the activities of MNCs. The behaviour of taxes on income and consumption is the only indicator to which I attach much significance. That is why I have not commented on the national accounts before (apart from lacking the technical competence to say anything sensible about them) and do not intend to do so now.

  9. JTO,
    Yes it is amazing that the DP merchants have for the most part stopped posting. Bit harsh on Simplteton though. If I recall he was evidence based. I am confident he would be bullish now.
    It still amazes me that so many people who claim analytical ability are still so pessimistic.

  10. The Sunday Business Post is essential reading this weekend for the following two articles.

    http://www.businesspost.ie/#!story/Home/News+Focus/Ireland%E2%80%99s+recovery+Rhetoric+or+reality%3F/id/8379b480-973e-488d-81e1-2714415f89b7

    http://www.businesspost.ie/#!story/Comment/Pat+Leahy/Pat+Leahy%3A+The+election+campaign+will+be+a+war+of+two+narratives%2C+the+left's+about+unfairness+and+the+government's+about+economic+recovery/id/8f31e863-f44e-4b28-ac9e-d2063449118b

    The one point that could be added is the fact that the political establishment in Ireland, with the present electoral system, is incapable of resolving the policy questions that arise and of creating the necessary minimum public national consensus on what needs to be done. Only the external constraints of (i) Eurozone membership and (ii) the possible negative reaction of the markets in the event of any real political upheaval can force it to do so.

    The unstated national consensus, that of a body politic which looks out for the interests of both the bottom two and the top two income deciles, and leaves the middle to fend for itself, will probably continue, suitably adapted to the more straitened circumstances of the country for the foreseeable future.

  11. @Michael Hennigan

    The IFAC were predicting in November 2013 that Ireland might miss its borrowing targets in 2014.

    http://www.rte.ie/news/business/2013/1122/488327-increased-risk-of-missing-deficit-target-report/

    In the reality, Ireland massively undershot its borrowing targets in 2014.

    If people convince themselves that the growth is not real, then it is to be expected that they will make wildly inaccurate forecasts on government borrowing.

    No one is answering the simple question I have put several times, which is:

    if Ireland’s growth is fake and the UK’s growth is real, then how come tax receipts in Ireland are up 8.5% in 2014 and its deficit falling rapidly, while tax receipts in the UK are up 1% in 2014 and its deficit rising?

    Media claims about Ireland’s growth being fake are little more than the ravings of conspiracy theorists, Ireland’s equivalent of ‘Prince Philip was behind the murder of Princess Diana’ nutters. A good example is Shane Ross’s column in today’s Sunday Independent. I believe more reliance should be placed on data provided by competent professional statisticians like the CSO, and less on the ravings of clowns like Ross.

    Regarding the SBP article, I refer to the statement in my earlier post:

    “The 5%-6% full-year growth figure is entirely consistent with other figures for PMIs, tax receipts, employment numbers, PPSN numbers, live register figures, Dublin Port traffic figures, job ad figures (Irish Employment Monitor), airport passenger movements etc etc.”

    So, the situation as of now is:

    (a) All recent business surveys (not just PMIs but IBEC and ISME surveys as well) state that the economy is growing rapidly. This is what is known as soft data.

    (b) The CSO, whose job it is to measure that growth, put it at between 5% and 6% in 2014. This is what is known as hard data.

    (c) Outcomes that one would normally expect such growth to produce, such as rapidly-increasing tax receipts and rapidly-decreasing unemployment are indeed happening, thereby confirming the growth.

    (d) Add in figures showing large increases in the volume (measured in tons) of physical goods passing through Dublin Port, the number of professional jobs advertised (Irish Employment Monitor), the number of PPSNs issued to foreign nationals and a host of others, and all doubt is removed.

  12. @ JTO

    A decade ago the disciples of Jean-Baptiste Say used to produce a blizzard of statistics to drown out dissent.

    To say today that some of the data is fake (Double Irish anyone?) is not to argue that there is no growth.

    The FT reported that John McHale, the fiscal council’s chairman, says the second-quarter data “has to be taken with more than the usual pinch of salt”.

    Eamonn Walsh, professor of accounting at University College Dublin, says GDP has become so unreliable that “it’s like using a sextant rather than a GPS to know what is going on”.

    Conall MacCoille, chief economist at Davy Stockbrokers, agrees. “National accounts are getting worse at capturing actual economic activity, especially in Ireland,” he says.

    All “talking down the economy”?

    You refer to the 8.5% tax receipts rise but that includes actual planned rises – some from prior years.

    The rise compared with target was 3% and 0.8% on income tax.

    Sometimes common sense helps and it should not be surprising that consumption per capita of private and public goods and services is below the EU average and closer to Spain – many of the jobs in the FDI sector are in administration – almost half in ICT & and a majority in the IFSC sector.

    http://ec.europa.eu/eurostat/statistics-explained/index.php/GDP_per_capita,_consumption_per_capita_and_price_level_indices

  13. @DOCM
    John Fitzgerald is quoted in the SBP article as follows:
    “it is a model of how to get out of a mess”
    According to the article he was commenting on how the current coalition deserves praise for how it handled the economy.

    Model for who?
    The people who were barely touched by the mess, or the people who mare still in the mess, or the people who are no longer around to witness the mess.

    The former IMF economist, Donal O’Donovan, brushes away the need for equity with the following quote,
    “you are not going to get an even recovery where everybody’s boat is lifted at the same rate”

    The politics are showing daily that we are are not all in the same boat.

  14. I don’t think anyone can doubt the economy is growing but its is interesting to compare the respective components of that recovery. Real GDP (using the seasonally adjusted quarterly figures) is now only 3.8% below the previous peak (in q4 2007) but Investment is 33% below the level at that time, Government spending 12.5% below and personal consumption down 8.4%.Exports (which now account for 115% of GDP, with imports at 90%) are an extraordinary 27% above the previous peak, with imports 10% higher. GNP is 6% below the peak.
    One other feature of note in the BoP data was the low level of FDI inflows this year, amounting to €5.9bn over the first three quarters against €28bn for 2013 as a whole.

  15. Dan,

    I can only speak of healthcare. From what I know of pipelines and given who is investing/openng capacty in Ireland, exports by the pharma sector will boom over the MT. I suspect growth from devices will not be too shabby either.

  16. @Tull
    “what do you mean by “barely touched by the mess”.”

    I regard anybody who has retained employment with an income (reduced) in excess of €80,000 to have been but “barely touched but the mess”. [I would concede only one exception to the above i.e consultants and doctors, but not a limitless income exception].
    More specifically the following groups have done exceptionally well.

    Dublin residential landlords, with income almost at ‘peak’ levels, interest rates on the floor, and their collective conscience in the sewers.
    Tribunal lawyers still garnering in the State largesse.
    The top legal, accounting, receivers, liquidators, who despite their roll in the crisis still milk the willing State for top dollar every time.
    AIB staff and pensioners, who promptly had their ‘defined benefit’ pensions back-stopped fully by the State citizens, 50% of whom have no pension coverage at all.

    John Fitzgerald may be correct is supporting the government’s policy on the necessity of deficit reduction, not defaulting on State debt (which few advocated), and in the necessity to conduct an organised retreat from the mess. The question of how the retreat was organised is the point that is very questionable.
    supporting bank debt; supporting favoured sectors (banking, landlords, legal, farmers and top level PS); no cohesive planning for housing; PS retirement bonanzas (many of whom are now back after their compulsory three year sun holidays-one I suspect on this blog); promotion of certain people to Europe; allowing PS and Local authority elites to shaft the citizens of the country by the manner in which they set up Irish Water; and last but by no means least allowing rents to spiral in Dublin (again to benefit landlords and banks).
    It is the latter issue that is driving and will continue protest, and will sooner rather than later put this government out of office.

  17. Michael Taft well worth reading on this …. [ a few locals around …

    ‘You’d think there would be concern among commentators about the latest GDP numbers produced by the CSO. After all, a quarterly growth of 0.1 percent is not that far from negative growth. Or that consumer spending has fallen in the last two quarters (an interesting contrast to all those feel good anecdotes about increased consumer confidence). Or that the explosion in export growth doesn’t quite tally with global trends or even other numbers produced by the CSO.

    […] So what does all this mean? We are still stuck in the grip of stagnation. The boost in previous headline numbers has levelled out. Is there growth in certain parts of the economy? Of course. Is it broad-based? No. Are the Government policies working? Well, for the top 10 percent, they appear to be working a charm. For most, it’s getting a bit harder on the farm.

    But if you find this all a bit depressing or negative – forget everything you read here. Just pull the covers over your head. You’ll have plenty of commentators who will lullaby you to sleep.

    ‘All is well . . . all is well . . . all is well . . . ‘

    http://www.irishleftreview.org/2014/12/15/mind-feel-spin/

  18. “I don’t think anyone can doubt the economy is growing ..”

    I doubt. Economic growth is a mighty complex matter – lots of closely interwoven components and variable variables. Amoebae ‘throw out’ pseudopodia (false feet) and it appears as if the organism has grown, but its an illusion – the ‘foot’ is long and thin – almost the length of the cell and about one tenth the thickness of the central part of the cell. That’s what I believe is happening – pseudogrowth. Long and thin and short on substance. But, we’ll see eventually – if we’re ‘allowed’.

    Could I have a bottle of an alcoholic liquor instead of a blanket? Just asking!

    The US economy seems to have eventually reached Stagnation Station – after 7 years. Not bad. Now lets see how long it takes – if ever, for it to ‘recover’. It took a world war for it to recover from the 1933-1938 bout of financial madness – what will it take now? It sure as hell won’t be a war! Will it? Yeah, I know. Lots of overseas mini wars!

    Some world! Some country!

  19. Could I have a bottle of an alcoholic liquor instead of a blanket?

    Judging by the content of that post, I think you already have.

  20. So, according to Taft, the figures showing y-o-y growth at 5% in the first 9 months of 2014 must be dismissed out-of-hand, but the figure showing GDP growth of 0.1% between Q2 2014 ad Q3 2014 must be taken at face value and indicates (according to Taft) stagnation.

    The statistics are quite straightforward and do not contain the complexity that those peddling the ‘no growth’ theory are attributing to them.

    (1) Quarterly GDP/GNP growth figures are extremely volatile and subject to frequent revision, quite often resulting in the final quarterly estimates being unrecognisable from the initial quarterly estimates.

    (2) Averaging the quarterly figures over the year as a whole gives figures that are much less volatile. Revisions to annual figures are much less and 90% of the time are upward revisions.

    (3) Applying this principle to the 2014 figures shows annual growth in 2014 at around 5%. The quarterly volatility resulted in the Q2 figures being over-estimates of actual growth (8-9% y-o-y) and the Q3 figures being under-estimates. Judging by October’s industrial output figures, the Q4 figures may well be similar to Q2 in that respect.

    (4) The 5% y-o-y figure (the average of the first 3 quarters of 2014) is totally consistent with a large number of other reliable indicators – among them (a) PMI, IBEC and ISME surveys (b) live register figures (c) tax receipts (d) PPSN numbers (e) employment figures (f) Dublin Port traffic figures (g) job ad figures (Irish Employment Monitor) (h) airport passenger movements (h) retail sales volume figures (i) new car and goods vehicle sales.

    The theory that there is no or little growth is an orchestrated and politically-motivated hoax, which will undoubtedly be intensified in the run-up to the April 2016 election. No matter what the GDP/GNP figures show, no matter how fast the live register numbers fall, no matter how much tax receipts rise and the budget deficit disappears, left-wing propagandists (and some right-wing ones like Shane Ross) will claim that the growth does not exist. It is beginning to resemble the hoax migration claims made in the run-up to the 2011 election, which were disproved by the 2011 census.

  21. So, if the growth is an illusion, explain this:

    http://dublinportblog.com/2014/10/dublin-port-throughput-q3-2014/

    “Dublin Port facilitating recovery with strong growth in the first nine months of 2014”

    “Dublin Port Company today published throughput statistics for the third quarter of 2014. The figures for this period show a 7.3% increase in export and import trade, as well as a 5.5% rise in ferry passenger numbers moving through Ireland’s largest and busiest port.

    Trade levels continue to increase at Dublin Port, with total throughput (imports and exports) for Q3 up 5.7% to 7.8 million tonnes. Total throughput for the year to date was 23.1 million tonnes, representing a 7.3% increase on the same nine month period last year. To put this figure in context, throughput levels at Dublin Port had reached 23.6 million tonnes by Q3 2007 during the height of Ireland’s economic activity. With growth in trade set to continue in the coming quarter, 2014 is expected to be a record year for trade at Dublin Port.”

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