Monthly Economic Bulletin 08 February 2019...the third quarter, while investment (+43.4 per cent)...

Prepared by the Economics Division,

Department of Finance

finance.gov.ie

Monthly Economic Bulletin 08 February 2019

Department of Finance | Monthly Economic Bulletin: January 2019

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2

The Department’s Monthly Economic Bulletin (MEB) provides a monthly update of some

of the key developments within the Irish economy across a broad spectrum of sectors.

The bulletin also outlines fiscal developments for the State, as well as being a source of

the Department’s most up-to-date forecasts and providing a snapshot of conditions in

some of Ireland’s key trading partners. The publication is designed with the aim of being

both informative and accessible to a wide readership. The MEB can be used as a

research aid or for presentational purposes and is also available online at the

Department’s website at www.finance.gov.ie

Contents

Economic Growth 3

International Developments 4

External Trade 5

Personal Consumption 6

Inflation 6

Employment 7

Earnings 8

Housing 9

Exchequer Balance 10

http://www.finance.gov.ie/


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3

Economic Growth

Macroeconomic outturn for 2018 (Q3)

In the third quarter of 2018, the level of GDP rose by 0.9 per cent relative to the previous quarter (on

a seasonally adjusted basis). As a result, the level of GDP was 4.9 per cent higher year-on-year.

Overall GDP was up 7.4 per cent over the first three quarters of 2018.

Modified domestic demand was up 4.1 per cent in the third quarter of 2018 on an annual basis. This

measure, which excludes leased aircraft and foreign owned intellectual property (IP) assets, is a

measure of underlying economic activity. Overall it was up 5 per cent over the first three quarters of

2018.

Personal consumption (+2.9 per cent) and exports (+9.4 per cent) recorded strong annual growth in

the third quarter, while investment (+43.4 per cent) and imports (+16.4 per cent) grew significantly

due to acquisitions of intellectual property and aircraft.

(year-on-year % changes)

2016 2017 2018

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017

Personal Consumption

2.9 3.1 -0.3 1.0 3.1 2.8 2.6 3.8 2.9 4.0 1.6

Government Consumption

4.7 3.4 3.3 3.5 4.1 4.9 3.4 5.3 6.1 3.5 3.9

Gross Investment

58.8 31.6 -22.4 -8.7 -46.0 -43.0 -2.9 -32.2 43.4 51.7 -31.0

Exports 2.0 2.7 3.0 4.4 8.6 14.5 5.9 12.1 9.4 4.4 7.8

Imports 16.7 7.9 -9.3 -3.1 -14.7 -10.5 -1.5 -5.8 16.4 18.5 -9.4

GDP 1.4 12.7 2.9 6.2 13.2 6.5 9.0 8.7 4.9 5.0 7.2

GNP 8.5 21.1 -1.1 0.0 16.0 3.0 8.8 11.4 3.1 11.5 4.4

Source CSO

Latest Economic Forecasts

The Department of Finance published its most

recent macroeconomic forecasts on Oct 9th as

part of Budget 2019. These forecasts along with

those of other forecasting institutions are outlined

in the table to the right.

GDP Forecasts Date 2018 2019

European Commission Feb 2019 6.8 4.1

Department of Finance Oct 2018 7.5 4.2

Central Bank of Ireland Jan 2019 4.4 3.6

IMF Oct 2018 4.7 4.0

ESRI Dec 2018 8.2 4.2

OECD Oct 2018 5.9 4.1


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4

International Developments The United Kingdom

The UK economy expanded by 0.3 per cent in the three

months to November 2018.

Annual HICP inflation was 2.1 per cent in December 2018,

down from 2.3 per cent in November 2018. Core inflation

was 1.9% in December, unchanged from November.

Employment increased by 141,000 people in the 3 month

period to November 2018 compared with May to July 2018

and increased by 328,000 y-o-y.

The unemployment rate was 4.0 per cent in the three month

period August to November, down from 4.2 per cent in the

same period last year.

The manufacturing PMI decreased to 52.8 in January but the

services PMI increased to 50.1 in January.

The United States

The US economy expanded by 0.8 per cent in Q3 2018 q-o-q and increased by 3.4 per cent y-o-y.

Annual inflation was 1.9 per cent in December, down from 2.0 per cent in November. Core inflation was

up 0.2 per cent on the month (sa) and up 2.2 per cent y-o-y.

US non-farm payroll data showed the US economy gaining 304,000 jobs in the month of January (sa),

with the unemployment rate increasing to 4.0 per cent in January.

The manufacturing PMI increased to 54.9 in January but the services PMI decreased to 54.2 in January

(above 50 indicates expansion).

The euro area

The euro area economy expanded by 0.2 per cent in Q3 2018 q-o-q and increased by 1.2 per cent y-

o-y (sa).

Annual inflation in the euro area is expected to be 1.4 per cent in January. Core inflation is expected to

be 1.2 per cent in January.

The unemployment rate in the euro area was 7.9 per cent in December (sa), unchanged from

November, and down from 8.6 per cent rate recorded in December 2017.

The manufacturing PMI decreased to 50.5 in January and the services PMI decreased to 50.8 in

January (above 50 indicates expansion).

Exchange Rate Developments The €/£ spot rate was 0.89 in January 2019, down from 0.88 in January 2018. The €/$ spot rate was

1.14 in January, down from 1.22 in January 2018. Brent crude oil was $59.9 in January 2019, down from $68.9 a year earlier.


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5

External Trade

External Trade and Industrial Production

On a monthly basis, the seasonally adjusted value of goods exports decreased by 2.0 per cent, with

imports falling by 9.3 per cent. As a result, the trade surplus increased by 12.3 per cent in November to

€4,594 million compared with October 2018.

On a monthly basis, industrial output decreased by 14.2 per cent (sa) in December, and fell by 18.9 per

cent in annual terms.

Output in the modern sector fell by 16.0 per cent in December and output in the traditional sector

decreased by 4.6 per cent in the month.

Purchasing managers Index

The PMI of the manufacturing industry posted

52.6 in January 2019, down from 54.5 in

December 2018. The seasonally adjusted

services Index posted 54.2 in January 2019, down

from 56.3 in December 2018.

Balance of Payments – Current Account

In Q3 2018, a current account surplus of 11.2 per

cent of GDP was recorded1.

A merchandise trade surplus of €26.4 billion was

recorded in Q3 2018.

A services trade surplus of €610 million as

recorded in Q3 2018, broadly flat on Q3 2017.

1 This headline figure is heavily distorted by the multinational sector in Ireland through inter alia contract manufacturing, aircraft leasing and re-

domiciled PLC’s.

-15.0

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0.0

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20

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17

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8

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Industrial Production (3mma)

Traditional sector

Manufacturing industries

Modern sector


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6

Personal Consumption

Headline retail sales, in volume terms, was down 0.4

per cent month-on-month (sa) in December but

increased by 3.7 per cent in year-on-year terms.

Excluding Motor Trades, the volume of ‘core’ sales

increased by 0.7 per cent (sa) in December month-on-

month and increased by 5.1 per cent year-on-year.

New private cars licensed for the first time decreased

by 4.6 per cent in the period January-December 2018

y-o-y.

Used (imported) private cars increased by 7.5 per cent

over the same period. As a result, total private cars i.e.

new and used (imported), increased by 0.5 per cent in

the period January – December 2018 y-o-y.

The Consumer Sentiment Index was 98.8 in January

2019, up from 96.5 in December 2018.

Inflation

On a HICP (Harmonised Index of Consumer Prices)

basis, prices in Ireland decreased by 0.1 per cent

between November and December 2018, but

increased by 0.8 per cent on a year-on-year basis.

The Consumer Price Index (CPI) was unchanged

over the month but increased by 0.7 per cent in year-

on-year terms in December 2018.

The main sectors impacting on the CPI index over the

month were increases in Transport (+0.06%) and

Restaurants & Hotels (+0.02%). The sector with the

largest downward contribution was Alcoholic

Beverages & Tobacco (-0.06%) and Clothing and

Footwear (-0.05%).


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7

Employment

The seasonally adjusted unemployment rate for January 2019 was 5.3 per cent, unchanged from December

2018 and down from 6.0 per cent in January 2018. January shows a (sa) decrease of 3,200 people on the

Live Register on the month and a fall of 37,759 year-on-year.

Third quarter 2018 Labour Force Survey (LFS)

The CSO published the LFS for Q3 2018 on the 20th November 2018.

Key points from the Q3 2018 release were:

The level of unemployment decreased by 19,700 in the

year to Q3 2018 (-12.1%) and the seasonally adjusted

unemployment rate in Q3 fell to 5.7 per cent from 6.7

per cent in Q3 2017.

There were 2.27 million people in employment in Q3

representing a 3.0 per cent annual increase (66,700).

In seasonally-adjusted terms, employment increased

by 0.5 per cent (10,700) over the previous quarter.

The labour force increased by 46,900 over the year to

Q3 2018 (2.0%).

The long-term unemployment rate decreased from 2.7

per cent to 2.1 per cent over the year to Q3 2018.

The youth unemployment rate decreased from 16.1

per cent to 14.9 per cent over the year to Q3 2018.

Latest Labour Market Developments

Employment Labour Force ILO Unemp. Rate

(sa)

ILO

Participation

Rate (sa)

Actual Y-o-Y % Y-o-Y % Overall LT Overall

Q2 2017 2,180,900 54,200 2.5 3,200 0.1 6.7 3.2 61.7

Q3 2017 2,206,500 48,500 2.2 10,900 0.5 6.7 2.7 61.9

Q4 2017 2,230,800 67,300 3.1 43,700 1.9 6.4 2.5 62.2

Q1 2018 2,220,700 62,300 2.9 31,900 1.4 5.9 2.1 62.2

Q2 2018 2,255,000 74,100 3.4 57,900 2.5 5.8 2.0 62.2

Q3 2018 2,273,200 66,700 3.0 46,900 2.0 5.7 2.1 62.1

Source: CSO


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8

Earnings

The CSO published Earnings and Labour Costs data for the third quarter of 2018 on the 26th November 2018.

The release covers employees in all sectors with the exception of agriculture, fishing and forestry. The key

points from the release are:

Average weekly earnings increased by 3.2 per cent y-o-y to

€740.32 in Q3 2018 from €717.55 in Q3 2017.

The average number of hours worked per week was 32.7

hours in Q3 2018, up from 32.5 in Q2 2018, an increase of 0.6

per cent.

Average hourly earnings increased by 2.1 per cent y-o-y to

€22.62.

Average weekly earnings in the public sector were €959 in Q3

2018 compared with €679 in the private sector.

Average hourly earnings increased by 1.6 per cent in the year

to Q3 2018 in the public sector, while hourly earnings in the

private sector increased by 2.2 per cent over the same period.

Weekly earnings in the private sector were up 3.6 per cent over

the year in Q3 2018 and up 1.9 per cent in the public sector.

Sectoral Developments

Across the economic sectors average weekly earnings increased in all of the 13 sectors in the year to

Q3 2018. The sectors with the largest increases were the Arts, Entertainment, Recreation and Other

Services sector (7.2 per cent), followed by the Accommodation and Food Services (6.1 per cent).

Annual Change in Average Hourly Earnings (%)

Source: CSO

2016 2017 2018

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Industry 1.5 1.8 0.2 3.2 2.3 1.8 3.5 1.2

Construction 0.6 2.1 -0.3 2.6 1.2 2.0 4.3 4.0

Wholesale/Retail: motor vehicle repair 4.2 1.7 1.9 2.0 1.6 2.1 2.1 2.5

Accommodation & Food Services 1.7 2.4 1.8 1.0 2.4 5.4 1.3 2.7

Financial, Insurance & Real Estate 0.1 2.6 3.9 3.6 3.6 4.9 5.1 2.6

Total 1.2 0.6 1.4 2.8 1.9 3.1 3.0 2.1


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9

Housing

There were 5,522, new dwelling completions in Q4 2018, increasing 20.9 per cent compared to the same

period in 2017. There were 18,072 new dwelling completions in 2018 compared to 14,407 in 2017.

The Ulster Bank Construction PMI rose to 56.3 in December 2018 up from 55.5 in the previous month.

Tourism

In November, the number of Mortgages

approved for house purchases decreased by

0.4 per cent (y-o-y) while the value of Mortgage

approvals increased by 1.5 per cent (y-o-y).

Residential property prices nationally increased

by 7.1 per cent in November, on a year-on-year

basis, following on from an increase of 8.4% in

October. Prices decreased by 0.5 per cent

nationwide over the month.

Dublin residential property prices decreased by

0.7 per cent over the month but increased by

5.0 per cent on a year-on-year basis; properties

outside of Dublin decreased by 0.1 per cent in

November but are up 9.3 per cent year-on-year.

There were 10,616,300 overseas visits to Ireland in

January to December 2018, an increase of 6.9 per

cent y-o-y.

The number of overseas trips made by Irish

residents during the same period increased by 4.2

per cent y-o-y to 8,276,200.

Total tourism and travel earnings from overseas

travellers to Ireland increased by 5.0 per cent

between Q2 2017 and Q2 2018, from €1,876 million

to €1,970 million.

Total tourism and travel expenditure by Irish

residents overseas increased by 10.0 per cent

between Q2 2017 and Q2 2018, from €1,664 million

to €1,831 million.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

GreatBritain

OtherEurope

USA andCanada

OtherAreas

Trips to Ireland by Area of Residence

Jan - Dec 2016

Jan - Dec 2017

Jan - Dec 2018


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10

Exchequer Balance An Exchequer surplus of €1,643 million was recorded in January 2019. This compares to a surplus of

€1,529 million in the same period last year. The €114 million year-on-year improvement in the

Exchequer surplus is primarily due to increased tax revenues and non-tax revenues, which to some

extent is offset by increases in voted and non-voted expenditure.

Tax revenues of €5,370 million were collected to end-January 2019, an annual increase of 7.0 per cent

or €351 million on end-January 2018.

Total net voted expenditure to end-January 2019 amounted to €4,215 million. This was (6.5%) or €255

million ahead of the same period in 2018.

Combined receipts from non-tax revenue and capital receipts of €1,080 million were up 9.1 per cent

(€90 million) year-on-year.

General Government Balance The headline General Government Deficit for 2017 was

€0.7 billion or 0.2% of GDP.2

The headline General Government Deficit is forecast to

remain at 0.1 per cent of GDP for 2018 and fall to 0.0% for

2019.

The central fiscal assumption in Budget 2019 is that

Ireland will have a balanced budget in 2019. This is

defined as achieving our Medium Term Budgetary

Objective (MTO) – a structural deficit of -0.5% of GDP.

Budget 2019 currently forecasts that Ireland will broadly

achieve its MTO in 2019.

General Government Receipts and Expenditure

2017 2018 Forecast 2019 Forecast

€m €m €m

GG Receipts 76,540 80,830 85,235

GG Expenditure 77,269 81,145 85,310

GG Balance -730 -315 -75

GGB (% of GDP) -0.2% -0.1% 0.0%

GG Debt (% of GDP) 68.4 64.0 61.4

Structural Balance (% of GDP) 0.4% -1.0% -0.7%

2 The general government balance (GGB) measures not just the difference between receipts and expenditure of central government [the Exchequer] but the fiscal performance of all arms of Government (other than commercial state-sponsored bodies), including local government and non-commercial state-sponsored bodies, as well as extra-budgetary funds such as the Social Insurance Fund and the Ireland Strategic Investment Fund. It is therefore a wider measure of the public finances than the Exchequer Balance (EB). The GGB operates on an accruals basis whereas the Exchequer Balance is a cash-based measure.


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The Department’s Budget 2019 booklet is available on the Department’s website: http://budget.gov.ie/Budgets/2019/2019.aspx

Electronic copy of Stability Programme Update 2018 can be accessed here:

http://www.finance.gov.ie/wp-content/uploads/2018/04/20180417-SPU-2018-for-website.pdf

Electronic copy of Summer Economic Statement 2018 can be accessed here: https://www.finance.gov.ie/wp-content/uploads/2018/06/20180622-SES-2018.pdf

An electronic copy of the National Reform Programme is available on the Department of the Taoiseach’s website: www.taoiseach.gov.ie

Copies of CSO releases can be downloaded from www.cso.ie Information on Central Bank statistical releases can be downloaded from

http://www.centralbank.ie

Details of forthcoming statistical releases, including the IMF’s advance calendar can

be found at: http://www.imf.org/external/NP/SEC/bc/eng/index.aspx

Details of the Commission’s Autumn 2018 forecast can be found at:

https://ec.europa.eu/info/sites/info/files/economy-finance/ip089_en_0.pdf

Details of the ESRI’s Quarterly Economic Update forecast can be found at:

http://www.esri.ie/publications/quarterly-economic-commentary-autumn-2018/

QUERIES ON THIS PUBLICATION TO: GENERAL QUERIES TO:

Michael Flanagan


Upper Merrion Street

Dublin 2.

Phone: (076) 100 7604

Email: [email protected]

Press Office


Upper Merrion Street

Dublin 2.

Phone: (01) 676 0336

Email: [email protected]



https://www.finance.gov.ie/wp-content/uploads/2018/06/20180622-SES-2018.pdf

http://www.taoiseach.gov.ie/

http://www.cso.ie/

http://www.centralbank.ie/

http://www.imf.org/external/NP/SEC/bc/eng/index.aspx

http://www.esri.ie/publications/quarterly-economic-commentary-autumn-2018/


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Department of Finance’s Budget 2019 Forecasts

Annex

2018 2019 2020 2021 2022 2023

Economic Output (% change)

Real GNP 5.9 3.9 3.3 2.3 2.4 2.5

Real GDP 7.5 4.2 3.6 2.5 2.6 2.7

Nominal GDP 9.3 6.2 5.4 4.4 4.4 4.5

Components of GDP

Personal Consumption 3.5 3.0 2.6 2.1 2.2 2.4

Government Consumption 3.5 2.9 1.9 1.8 1.8 1.8

Investment -8.9 7.1 5.7 4.4 4.3 4.3

Exports 7.0 5.6 4.8 3.8 3.7 3.6

Imports 0.9 6.2 5.3 4.5 4.3 4.1

External Balance

Current A/C (% of GDP) 12.0 11.7 11.5 10.9 10.5 10.0

HICP 0.7 1.5 1.7 2.9 2.4 2.6

Source: CSO, Department of Finance

Monthly Economic Bulletin 08 February 2019...the third quarter, while investment (+43.4 per cent)...

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