Economy | Bannon

Irish economy grew by 26.3% last year reports CSO

12th July 2016/in Economy, News, Reports

The Irish economy grew by a colossal 26.3% in 2015 rather than the original 7.8% estimate, according to the Central Statistics Office (CSO).

The revised growth rate, the strongest on record, reflects a 102% spike in net exports. However the figures appear to have been hugely affected by a number of once-off factors, including activity in the aircraft leasing sector and restructuring by multinational companies involving the movement of patents.

This was linked to a handful of firms relocating their assets here – some through so-called capital inversion deals.

In one case, an aircraft leasing company redomicilled its entire multibillion euro balance sheet to Ireland.

The CSO described the new data as “dramatic”.

Debt to GDP

The new figures reduce the Government’s debt to GDP ratio to below 80%.

It now estimates the annual expansion in gross domestic product (GDP) for 2015 was 26.3%.

However a better measure of the underlying growth of the economy is probably provided by consumer spending, which rose by 4.5% last year. The massive growth was driven by a huge jump in investment and exports.

Industrial output

Gross National Product (GNP), which strips out the effects of multinational profits, grew by 18.7%.

Industrial output during the year rose by a record 97.8%.

The latest figures for the first quarter of 2016 show GDP actually contracted by 2.1% while GNP rose by 1.3%. However the dramatic once-off factors affecting the 2015 figures make the 2016 first quarter estimate difficult to interpret.

Net exports during the quarter rose by 11.2% while business investment declined 16.1%.

Report by the Irish Times

CSO

Unemployment hits new post-crash low of 7.8%

31st May 2016/in Economy, News, Reports

Unemployment has fallen to a new post-crash low of 7.8% as conditions in the jobs market continue to improve. The latest official figures show the number of workers classified as unemployed fell by 1,500 to 169,700 in May. This equated to an annual decrease of 38,300 or 1.8%.

The State’s headline rate of unemployment now stands at an eight-year low of 7.8%, down from 7.9% the previous month and 9.6% a year ago. The last time the State’s jobless rate hit this level was in October, 2008.

The figures also show that youth unemployment, which stood at 20.8% just 12 months ago, has now fallen to 15%.

Having had one of the highest jobless rates in Europe only a few years ago, Ireland’s unemployment rate is now well below the euro zone average of 10.2%.

The CSO’s unemployment estimates are based on the Quarterly National Household Survey but take into account changes to the Live Register.

The figures show the number of males categorised as unemployed in May was 109,200, down 1,600 on the previous month, while the number of females unemployed was unchanged at 60,400.

CSO reports

Irish Times

Hiring demand in construction rises 46%

14th March 2016/in Development, Economy, News, Reports

Activity in the construction sector accelerated sharply last month as demand for industry professionals grew by up to 46%. Two new reports over the weekend confirmed that, while the industry is still well behind its pre-crash peak, it is expanding quickly while wages are on the rise.

Some recruiters have also started trying to tempt emigrants back to fill building jobs. Ulster Bank’s latest Construction purchasing manager’s index (PMI) for February shows it expanded at the fastest rate since the index was launched in 2000.

Marked acceleration

Construction activity has increased every month for two and a half years, the report says, as the sector regains some ground lost during the crash. “A marked acceleration in activity was experienced across the sector: record growth rates were also recorded in housing and commercial activity, while the increase in civil engineering was the strongest since August 2006,” said Simon Barry, chief economist for Ireland at Ulster Bank. He warned, however, that the sector still has a long way to go to fully recover. “Record rates of growth need to be seen in the context of what are still extremely low levels of construction activity,” he said.

Official figures last week showed construction output is 50% off pre-crisis peak levels. “Following the collapse in activity during the financial crisis, the process of returning to more normal levels of activity will likely require sustained growth over many years. Nevertheless, the extremely positive results from the latest surveys suggest that there has been a major pick-up in recovery momentum early in 2016.” Mr Barry said.

The sharpest expansion was seen in residential housing projects, although building levels are still far below demand. Meanwhile, activity on big-ticket infrastructural projects also picked up.

The rate of job creation in the sector grew at the fastest level since October 2014, according to the Ulster Bank. “The usage of sub-contractors continued to increase sharply during February, despite the rate of expansion slowing slightly from the start of the year,” according to the report. “Companies recorded a sharp fall in the availability of sub-contractors, with the rate of decline the fastest since July 2015.”

Recent results from listed companies such as Grafton Group, which last week reported significant rises in sales at its Irish builders’ yards, also suggest the industry is on the mend.

Construction jobs

Demand for construction and property industry staff rose 46% in February, according to a report by Hays Ireland, a recruitment company. It said a quarter of the new construction jobs were in the homebuilding sector. Middle managers in areas such as quantity surveying and architecture are the most in demand, it said. Architects were twice as in demand last month compared to the same month last year.

Hays ran a “Back to Ireland” project over Christmas designed to tempt home construction workers who had emigrated and were back in Ireland for the holidays. It claimed the campaign had a “significant impact”.

“We were interviewing candidates right through the Christmas period,” it said.

Meanwhile, although the outlook appears positive for construction, economists say activity needs to pick up further to meet demand. “With strong GDP and wage growth expectations in Ireland in the coming years, the economic backdrop remains positive for house building. Supply of new homes continues to fall well short of the 25,000-30,000 needed in Ireland,” said Davy stockbrokers in a recent report.

Irish Times

Ulster Bank Construction PMI®Report (RoI)

Economic Growth Strongest in 15 Years

10th March 2016/in Economy, News, Reports

CSO Quarterly National Accounts figures for Q4 2015 were released this morning and show GDP to have increased by 7.8% annually in 2015, outstripping all other euro zone countries and most official forecasts. This is the fastest annual GDP growth since 2000, when the economy expanded by 10.2%. GNP also performed strongly, up 5.7% year-on-year.

Investment activity grew by 28.2% in 2015, while personal consumption, the largest component of domestic demand, rose by 3.5%, with car sales highlighted as a main contributor. Import growth of 16.4% in 2015 outpaced that of exports at 13.8%.

Consumer Sentiment and Retail Sales

Consumer sentiment has returned to levels last seen in early 2006. The index reached 105.8 in February 2016, representing a 10.1% increase relative to February 2015, or a 167% increase since the series reached its lowest point in July 2008.

The latest CSO data show retail sales volumes to have increased by 10.3% in the year to January on the back of a sharp increase in car sales. If motor trades are excluded, sales were up by 6.3% year-on-year. The total value of retail sales grew by 8.9% annually during this period, or 4.5% ex. motor. The breadth of the recovery is evidenced by the fact that all thirteen retail sectors saw annual increases in both volume and value terms in January, with the strongest performing categories being cars (+20%), clothing & footwear (+12.4%), furniture & lighting (+12.3%) and department stores (+1.9%) (in volume terms).

The Visa Europe Consumer Spending Index shows that there has been no slowdown in household expenditure in the beginning of 2016, registering a year-on-year increase of 11.3% across all payment methods in February, faster than the 7.5% increase recorded in the year to January and the steepest increase recorded in the 18-month series history. High street retailers benefitted from an increased willingness among consumers to spend on discretionary items, leading to a 9.2% annual rise in expenditure relative to February 2015. Online spending continued to see a sharper expansion, up 15.4% year-on-year.

CSO

Returns on Irish Commercial Property Increase 25% in 2015

27th January 2016/in Economy, News, Reports

Strong performance in Ireland’s commercial property sector continued throughout 2015, albeit at a slightly slower pace than the record levels of growth seen in 2014. Total returns increased by 6% in Q4 bringing the 12-month return for 2015 to 25% – almost double that of the UK over the same period (13.8% according to the IPD UK Monthly Property Index).

Growth is notably more balanced now than it was in 2014. Retail and industrial property outperformed offices in Q4, returning 7% and 5.7% respectively compared with 5.6% for office properties. Retail capital values also grew at a faster rate than offices in Q4 for the first time since 2012, increasing by 5.7% compared with 4.5% for offices and 4.1% for industrial property.

Nevertheless, strong rental growth of 17.4% throughout the year driven by a strong occupier market and low levels of stock meant that offices continued to lead the market overall in 2015, returning 27.1% year-on-year, compared with 21.2% growth for industrial property and 20.9% growth for retail.

The success of the property market in Ireland is further emphasised by the fact that it far outperformed both Irish bonds, which returned 4.4% in the 12 months to December 2015 (JP Morgan 7 – 10 year), and Irish equities, which returned 6.4% (ISEQ Equity Index).

Facebook to build €200m data centre in Meath

25th January 2016/in Economy, Investment, News, Planning

The €200 million centre, which is planned for a site in Clonee, Co Meath, is due to start construction in the next couple of months and will come online by early 2018 at the latest.

The company intends to build an initial 31,000 sq.m facility on the site, with planning permission for a second building already granted.

The project is expected to support about 2,000 jobs during the construction phase.

This will be the second data centre the company has built outside the US; the first was Lulea in Sweden, which opened in 2013. The Swedish facility employs about 150 people, and it is understood the Irish centre will employ a similar number of operations staff.

“Ireland has been home to Facebook’s international headquarters since 2009 and we’re excited to be investing further here,” said head of Facebook Ireland Gareth Lambe. “We want to innovate in Europe and for Europeans, and the Clonee data centre will house some of the big breakthroughs Facebook has made in this area. Like its predecessors, this project will generate hundreds of millions of euros in economic activity and support hundreds of jobs in the local community.”

The centre will use technology designed by Facebook’s open source Open Compute project, said Niall McEntegart, Facebook’s director of datacentre operations for EMEA and APAC. “There’s an ongoing need for more infrastructure capacity. It [the Clonee site] is excellent from a construction point of view. It’s pretty much shovel ready, with a really good power and network infrastructure.”

Chief executive of Meath county board Jackie Maguire said the county was hoping to attract further investment to the area as a result of Facebook’s investment.

Article in the Irish Times

16 Reasons to have a Happy 2016

22nd January 2016/in Economy, News, Reports

Building and Construction Output increases in 3rd quarter of 2015

10th December 2015/in Economy, News, Reports

The volume of output in building and construction increased by 3.1% in the third quarter of 2015 when compared with the preceding period.

This reflects an increase of 3.2% in the volume of residential building work. The volume of non-residential building work and civil engineering decreased by 4.0% and 2.6% respectively. The change in the value of production for all building and construction was -0.3%.

On an annual basis, the volume of output in building and construction increased by 14.0% in the third quarter of 2015. There was an increase of 9.5% in the value of production in the same period. The annual rise in the volume of output reflects year-on-year increases of 36.2% and 3.3% respectively in residential building and non-residential building work. The volume of output in civil engineering fell by 5.9% in the year to Quarter 3 2015.

www.cso.ie

Irish Property produces double the return of the UK over 12 months

28th October 2015/in Economy, News, Real Estate

Strong performance in Ireland’s commercial property market has continued throughout 2015, albeit at a slightly slower pace than was seen last year. According to the latest results of the IPD/SCSI Ireland Quarterly Property Index, total returns from Irish investment property grew 6.1% in the quarter to September 2015, down slightly from the 6.7% recorded in Q2.

The latest data show that in the 12 months to the end of September 2015, total returns for Irish commercial property were up 28.5%, which is almost double the 15.3% figure recorded in the UK for the same period. Q3 returns were notably more balanced across Irish property types, with retail, office and industrial sectors recording quarterly growth of 5.8%, 6.4% and 4.8% respectively.

Offices continued to lead the market in Q3 as capital values increased by a further 5.2% meaning that they are now just over 40% off the 2007 peak, compared to 65% two years ago. This growth has been driven by a strong rental growth as positive economic performance in recent years has led to increased demand for office space and supply shortages prevail in many areas. Rental values for office properties increased by 3.8% in Q3 or 23.1% year-on-year, far outperforming 12-month rental growth for both retail and industrial properties of 4.1% and 6.4% respectively.

Budget 2016 Overview

14th October 2015/in Economy, News, Reports

GDP is expected to grow by 6.2% this year, putting Ireland on track to be the fastest growing economy in the European Union for the second consecutive year. This strong performance is forecast to continue into 2016 when we should see the economy grow by a further 4.3%. The economic performance alone shows that Ireland’s recovery is well underway, and allowed the Government to deliver a very positive budgetary reforms this year with a range of tax cuts and spending worth an estimated €1.5bn. Key points as follow:

Universal Social Charge

The Universal Social Charge (USC) entry threshold the will increase from €12,012 to €13,000. There will be cuts to all three levels of the USC. The top rate will drop from 7% to 5.5% for income earned in excess of €18,668 up to €70,044. The 3.5% rate will be reduced to 3% for income from €12,012 to €18,668, while the bottom rate of 1.5% will drop to 1% for the first €12,012 of income earned. These cuts mean the marginal rate of tax will be 49.5% for all people earning under €70,444.

Self-employed and Small Business Owners

An earned income tax credit to the value of 550 is to be introduced for small business owners and the self-employed.

Employment

The Government expects to recover all jobs lost throughout the downturn by 2020, with unemployment expected to drop to 6.25% by 2021.

The statutory minimum wage is to be increased from €8.65 to €9.15 per hour from January.

A new tapered PRSI credit is to be introduced with a maximum level of €12 per week or €624 per year. This change is to ensure that low income earners see a significant improvement in net incomes. For employer PRSI, the entry point to the top rate of 10.75% will be increased by €20 to €376 per week.

Children

Child benefit is set to increase by €5 per month. An extension of the Early Childcare and Education scheme will see free childcare for children between 3 and 5.5 years, while free GP care is to be extended to all children under 12 years of age.

Old Age Pension

The old age pension will increase by €3 per week from January.

Housing

NAMA is to deliver a target of 20,000 residential units by 2020, 90% of which will be in the Greater Dublin Area. This will require funding of €4.5bn, but will not compromise NAMA’s debt repayment commitments. About 75% of these units will be houses, mainly starter homes. There is also an increase in the current allocation for the provision of homeless services by an additional €17m.

The revaluation of homes for Local Property Tax is to be postponed from 2016 to 2019, meaning that rising property values in recent years will not mean rising property taxes just yet – a welcome and important change.

According to the SCSI, the Government has missed a prime opportunity to fix housing sector issues in Budget 2016. The Society said the lack of direct measures to improve the commercial viability of new home building and increase the supply of housing was deeply disappointing. The Government’s Housing Agency has previously stated that 21,000 units per year will be needed and far this year just 7,000 units have been built nationwide. The lack of direct action means that more people will continue to struggle to afford to buy and rent property in a market constrained by severe shortages in supply.

Retail

There is some concern that not enough has been done to offset the cost of minimum wage increases to retailers. This may disproportionately impact the retail sector, where labour costs make up a large proportion of the cost base. Retail Ireland chief Thomas Burke said the reduction in employer’s PRSI is simply not enough to encourage the creation of new jobs.

The introduction of earned income tax credits will benefit small business owners, including small retailers. Measures to bring Irish card payments closer to European standards have also been introduced and should greatly reduce the cost for retailers associated with accepting card payments. A new EU regulation will halve transaction fees faced by retailers to 30 basis points for credit cards. Budget 2016 sees the corresponding fee for debit cards reduced to 10 basis points. The €5 stamp duty on debit/ATM cards will also be removed and replaced with a reduced charge of 12c per ATM transaction in order to encourage and incentivise greater use of card payment by consumers.

Positive budgetary measures should provide an extra boost to consumer confidence ahead of the all-important Christmas retail period. Reductions in taxation and USC, along with rising unemployment and increases in minimum wage should leave customers with more money to spend, which should have a knock-on effect on retailer turnovers next year.