With 3 transactions in excess of 100,000 sq. ft. take-up reached an impressive 1.2m sq. ft. in Q4. This brings the year-end total to 3.29m sq. ft. across 204 transactions. Full report to follow.
The strongest ever quarter for the Irish investment Market with total turnover for Q4 2019 reaching a staggering €3.76bn and total turnover for the 12 months of the year in excess of €7bn. To put the quarter in context it is higher than the entire annual turnover of the last cycle peak in 2006 of €3bn+ and annualised smashes this cycles 2016 peak of €4.5bn. PRS remained the most active sector accounting for 41% of transaction value. Full Report to follow.
The Irish economy looks set to register strong growth again in 2019 with GDP likely to increase by almost 6 per cent in the current year. While certain multi-national related transactions are distorting the headline figures, the large increase in taxation receipts and the continued strong performance of the Irish labour market means the underlying economy is performing well.
The persistent growth of the Irish economy is remarkable given the strong headwinds observed in 2019, the uncertainty about the Brexit process, and the moderation observed in global conditions, all of which are likely to have had a negative impact on the domestic economy. The Brexit process has merely been parked, with the possibility of a free trade agreement being negotiated between the UK and the EU in 2020. This will almost certainly result in further uncertainty in the years ahead. We expect to see the economy grow by a slower rate in 2020 of 3.3 per cent.
Another potential challenge for the Irish economy is the issue of corporation tax receipts, which are becoming an increasingly large share of the total tax receipts of the Irish exchequer. They now account for over 18 per cent of total tax receipts and there is concern that a portion of these receipts may be windfall revenues, which are not sustainable. ESRI economist Petros Varthalitis examines the implications for key fiscal metrics if there was a sudden reduction in the amount of corporation tax receipts available. It would likely require significant measures to be adopted by the Government in order to maintain fiscal discipline. The results underpin the need to quantify the potential windfall component of these receipts. They are also important given the recent proposals by the OECD for corporation tax policy.
The Commentary also examines the regional diversity of the Irish property market performance over the last 10 years. ESRI economists Matthew Allen-Coghlan and Kieran McQuinn note that both prices and rents have grown at significantly different rates in different areas of the country during this period. Areas of the country that had relatively high prices and rents initially experienced the fastest pace of growth subsequently. This suggests that different regions of the country have experienced varying economic growth rates over the past 10 years.
The seasonally adjusted unemployment rate for November 2019 was 4.8%, remaining unchanged from October 2019 and down from 5.6% in November 2018. The seasonally adjusted number of persons unemployed was 117,800 in November 2019, compared to 117,700 in October 2019. When compared to November 2018, there was an annual decrease of 17,600 in the seasonally adjusted number of persons unemployed.
Summary points for November
The volume of retail sales decreased 0.5% in October when compared to September on a seasonally adjusted basis and increased by 3.0% on an annual basis. When Motor Trades are excluded, the volume of retail sales decreased by 2.1% in October 2019 and rose by 3.2% when compared with October 2018.
The sectors with the largest month on month volume decreases were Other Retail Sales (-9.3%) and Fuel (-5.2%). The sectors with the largest monthly volume increases were Pharmaceuticals, Medical & Cosmetic Articles (8.1%) and Clothing, Footwear & Textiles (3.0%).
There was a decrease of 1.0% in the value of retail sales in October 2019 when compared with September 2019 and there was an annual increase of 1.4% when compared with October 2018. If Motor Trades are excluded, there was a decrease of 2.4% in the value of retail sales in the month and an increase of 0.5% in the annual figure.
There was an annual increase in employment of 2.4% or 53,700 in the year to the third quarter of 2019, bringing total employment to 2,326,900. This compares with an annual increase of 2.0% or 45,000 in employment in the previous quarter and an increase of 3.0% or 66,700 in the year to Q3 2018.
Residential property prices increased by 1.1% nationally in the year to September. This compares with an increase of 2.0% in the year to August and an increase of 8.5% in the twelve months to September 2018.
In Dublin, residential property prices decreased by 1.3% in the year to September – house prices decreased by 1.5% and apartments decreased by 0.2%. The highest house price growth in Dublin was in Fingal at 1.5%, while Dun Laoghaire-Rathdown saw a decline of 6.8%.
Residential property prices in Ireland excluding Dublin were 3.6% higher in the year to September, with house prices up by 3.4% and apartments by 4.8%. The region outside of Dublin that saw the largest rise in house prices was the Border at 11.8%, while the smallest rise was recorded in the Mid-East at 0.2%.
Overall Decline
Overall, the national index is 16.9% lower than its highest level in 2007. Dublin residential property prices are 21.4% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 20.0% lower than their May 2007 peak.
Recovery
Property prices nationally have increased by 85.3% from their trough in early 2013. Dublin residential property prices have risen 94.7% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 84.0% higher than at the trough, which was in May 2013.
The seasonally adjusted unemployment rate for October 2019 was 4.8%, down from 4.9% in September 2019 and down from 5.7% in October 2018. The seasonally adjusted number of persons unemployed was 117,300 in October 2019, compared to 118,100 in September 2019. When compared to October 2018, there was an annual decrease of 19,400 in the seasonally adjusted number of persons unemployed.
Summary points for October
The volume of retail sales increased 4.3% in September when compared to August on a seasonally adjusted basis and increased by 4.2% on an annual basis. When Motor Trades are excluded, the volume of retail sales increased by 2.3% in September 2019 and rose by 4.7% when compared with September 2018.
The sectors with the largest month on month volume increases were Hardware, Paints & Glass (8.8%) and Motor Trades (8.4%). The sectors with the largest monthly volume decreases were Department Stores (-2.2%) and Clothing, Footwear & Textiles (-2.2%).
There was an increase of 3.8% in the value of retail sales in September 2019 when compared with August 2019 and there was an annual increase of 2.8% when compared with September 2018. If Motor Trades are excluded, there was an increase of 2.0% in the value of retail sales in the month and an increase of 2.1% in the annual figure.
The filing of its accounts confirmed last week that Smyths Toys is already making a financial return on its deal last year to acquire the central European operations of Toys R Us.
The family-owned group is now – individually and collectively – profitable in Ireland, the UK, Germany, Austria and Switzerland. That surely makes Smyths the most successful ever Irish retailer abroad.
The two biggest indigenous Irish grocers, Dunnes Stores and Musgrave, are larger, more storied, family-owned operations than Smyths. Yet the toy retailer has succeeded abroad where they have failed.
Dunnes and Musgrave both have operations in Spain, but in recent years both effectively abandoned their forays into Britain.
Smyths, meanwhile, has completely conquered the British market, opening more than 100 large retail outlets there in a little over a decade, vanquishing its specialist rivals. Its UK sales are now about €675 million.
Its prospects for maintaining growth in Britain are likely to slow as Brexit keeps sterling weakened, and Smyths runs out of unserviced locations to open new stores. As it already dominates the specialist Irish toys market, Smyths’ most obvious avenue for further growth became Europe.
The global insolvency last year of Toys R Us provided Smyths with a golden opportunity to buy out of bankruptcy the German-Swiss-Austrian stores of its US rival. The accounts filed last Friday show it paid less than €62 million to gain control of more than 90 outlets, which made Smyths profits of almost €14 million in 2018.
As it fine tunes them to better fit its sophisticated big box retailing model, their financial contribution may improve further.
The wider Smyths group is now on course for annual sales of close to €1.4 billion. Despite the success of its foreign forays, the group still made an annual profit of just €36 million.
With margins of less than 3%, Smyths may be tempted to expand its footprint even further if it wants to keep growing profits in years to come.
Foreign Direct Investment in Ireland 2017, a thematic publication exploring the impact of FDI and globalisation, shows over 300,000 jobs are directly linked to foreign investment into Ireland.
Despite a decrease of €54bn in the stock of Foreign Direct Investment into Ireland between 2016 and 2017, at €744bn (253% of GDP) investment still remains high in comparison to other EU countries showing the highly globalised nature of the Irish economy.
Employment figures show growth across all sectors since 2012, with the largest growth (28%) recorded in the scientific and technical activities sector. In 2017 average wages in foreign-owned multinational enterprises (MNEs), at €50,000, were significantly higher than those paid by domestic firms (€33,000), but lower than those paid by Irish MNEs (€57,000). All sectors experienced wage growth, with the largest growth in the information and communications sector and the administration and support services sector, which experienced 26% growth and 20% growth respectively between 2012-2017.
This is the second time the CSO has published this experimental publication linking data across statistical domains. Foreign Direct Investment in Ireland 2017 looks at the role of investment into Ireland, its associated globalisation and its role in the Irish domestic economy. This publication brings together several different data sources designed to complement the annual and quarterly Foreign Direct Investment statistics presented in our International Accounts.
New to this year’s publication is a breakdown of gender balance in FDI firms and an analysis of the influence of Special Purpose Entities (SPEs), distinguishing between actual investment in firms operating in Ireland and funds passing through via SPEs.
Residential property prices increased by 3.1% nationally in the year to April. This compares with an increase of 3.8% in the year to March and an increase of 13.3% in the twelve months to April 2018.
In Dublin, residential property prices rose by 0.5% in the year to April, with no change in house prices and apartments rising by 2.2%. The highest house price growth in Dublin was in South Dublin at 4.0%, while Dun Laoghaire-Rathdown saw the greatest decline in house prices (1.5%).
Residential property prices in Ireland excluding Dublin were 5.6% higher in the year to April, with house prices up by 5.8% and apartments by 5.9%. The region outside of Dublin that saw the largest rise in property prices was the Border at 11.4%, while the smallest rise was recorded in the Mid-East at 1.5%.
Overall Decline
Overall, the national index is 18.5% lower than its highest level in 2007. Dublin residential property prices are 22.5% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 21.8% lower than their May 2007 peak.
Recovery
Property prices nationally have increased by 81.9% from their trough in early 2013. Dublin residential property prices have risen 91.9% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 79.9% higher than at the trough, which was in May 2013.
There was an annual increase in employment of 3.7% or 81,200 in the year to the first quarter of 2019, bringing total employment to 2,301,900. This compares with an annual increase of 2.3% or 50,500 in employment in the previous quarter and an increase of 2.9% or 62,400 in the year to Q1 2018.
Summary points for Q1 2019
The increase in total employment of 81,200 in the year to Q1 2019 was represented by an increase in full-time employment of 62,600 (+3.5%) and an increase in part-time employment of 18,600 (+4.1%).
On a seasonally adjusted basis, employment increased by 35,200 (+1.5%) over the previous quarter. This follows on from a seasonally adjusted increase in employment of 18,400 (+0.8%) in Q4 2018, an increase of 10,900 (+0.5%) in Q3 2018, an increase of 15,400 (+0.7%) in Q2 2018 and an increase of 7,400 (+0.3%) in Q1 2018.
Unemployment decreased by 18,600 (-14.0%) in the year to Q1 2019 bringing the total number of persons unemployed to 114,400. This is the twenty seventh quarter in succession where unemployment has declined on an annual basis.
The seasonally adjusted unemployment rate decreased from 5.6% in Q4 2018 to 5.0% in Q1 2019, while the seasonally adjusted number of persons unemployed decreased by 14,300 to 120,300.
The long-term unemployment rate decreased from 2.1% to 1.7% over the year to Q1 2019. Long-term unemployment accounted for 35.7% of total unemployment in Q1 2019.
The total number of persons in the labour force in the first quarter of 2019 was 2,416,300, representing an increase of 62,600 (+2.7%) over the year. This compares with an annual labour force increase of 31,900 (+1.4%) in Q1 2018. The number of persons not in the labour force in Q1 2019 was 1,480,200, an increase of 9,900 (+0.7%) over the year.
Employment
The annual increase of 81,200 (+3.7%) in employment was represented by an increase of 30,800 (+2.5%) in male employment and an increase of 50,400 (+5.0%) in female employment over the year.
Employment increased in 12 of the 14 economic sectors over the year (excluding Not stated). The largest rates of increase were recorded in the Transportation and storage (+11.4% or +10,800) and the Administrative and support service activities (+10.6% or 10,500) sectors.
The overall employment rate among persons aged 15-64 was 69.3% in Q1 2019 compared to 67.9% in Q1 2018.
The number of employees in Q1 2019 was 1,966,800, up 99,300 (+5.3%) over the year. The number of self-employed persons decreased by 14,500 (-4.3%) over the year to 323,900.
Unemployment
Male unemployment decreased by 7,800 (-10.6%) to 65,900 over the year to Q1 2019, while female unemployment decreased by 10,700 (-18.1%) to 48,400 over the same period.
The overall unadjusted unemployment rate decreased from 5.7% to 4.8% over the year to Q1 2019.
In the year to Q1 2019, the number of persons classified as long-term unemployed decreased by 9,300 (-18.5%), bringing total long-term unemployment to 40,900. Short-term unemployment decreased by 9,500 (-11.9%) over the year to 70,300.
The unemployment rate for 15-24 year olds (youth unemployment rate) decreased from 12.5% to 10.9% over the year to Q1 2019.
A series of Monthly Unemployment statistics was first issued by the CSO in 2015. The most recent publication was issued in May 2019 for reference month April 2019. The Monthly Unemployment release contains a series of monthly unemployment rates and volumes. These series are based primarily on the LFS and are compiled in accordance with agreed international practice. Data for more recent periods for which no LFS benchmark is available is adjusted for trends in the Live Register. These statistics are the definitive measure of Monthly Unemployment and replaced the SUR (which has been discontinued).
The previously published seasonally adjusted monthly unemployment figures are now revised with the availability of new LFS benchmark unemployment estimates for Q1 2019. The seasonally adjusted monthly unemployment rate for March 2019 is now revised from 5.4% to 4.7%, while the seasonally adjusted number of persons unemployed is revised from 131,400 to 114,400.
The provisional estimate for April 2019 has also been revised with the seasonally adjusted unemployment rate for April 2019 revised from 5.4% to 4.6%, while the seasonally adjusted number of persons unemployed is revised from 129,700 to 112,500.
Labour force
As with employment, the number of persons in the labour force is also influenced by changes in the size of the working age population (demographic effect). Up to the start of 2008 this demographic effect had been adding at least 30,000 to the labour force on an annual basis, primarily driven by net inward migration. This demographic effect peaked at over 90,500 in the second quarter of 2007.
With the decline in inward migration the positive demographic effect started to fall in the second half of 2007 and continued to decline throughout 2008 and 2009 before becoming negative in Q3 2009. The negative demographic effect continued for each quarter until Q1 2014. The demographic effect has been positive since Q2 2014 and in Q1 2019 a positive demographic effect contributed an increase of 36,000 to the overall change in the labour force.
In addition to the demographic effect, the change in the size of the labour force is influenced by changes in participation. While the overall participation rate increased by 0.5 percentage points to 62.0% over the year, the net result of changes in individual age groups for the same period was a positive participation effect of 26,600.
Of those persons not in the labour force, the number classified as being in the potential additional labour force was 108,200 in the first quarter of 2019.
International Comparisons
The employment rate in Ireland increased by 0.8 percentage points to 69.1% over the year to Q4 2018. The employment rate in the EU-28 in Q4 2018 was 68.9%.
The unadjusted unemployment rate among the EU-28 countries in the fourth quarter of 2018 was 6.6%, while the comparable rate in Ireland was 5.4%. The highest unemployment rates among the EU-28 countries in Q4 2018 were recorded in Greece and Spain (18.7% and 14.5% respectively), while the lowest rates of 2.0% and 3.2% were recorded in the Czech Republic and Germany respectively.
The latest figures available at the time of finalising this release indicate that the seasonally adjusted unemployment rate for the EU-28 for March 2019 was 6.4% compared to the revised seasonally adjusted monthly unemployment rate of 4.7% for Ireland for the same period.
Residential property prices increased by 3.9% nationally in the year to March. This compares with an increase of 4.3% in the year to February and an increase of 12.6% in the twelve months to March 2018.
In Dublin, residential property prices rose by 1.2% in the year to March, with house prices rising by 0.7% and apartments by 2.5%. The highest house price growth in Dublin was in South Dublin at 3.4%, while the lowest growth was in Dun Laoghaire-Rathdown at 0.4%.
Residential property prices in Ireland excluding Dublin were 6.8% higher in the year to March, with house prices up by 6.7% and apartments by 8.6%. The region outside of Dublin that saw the largest rise in property prices was the Mid-West at 11.9%, while the smallest rise was recorded in the Mid-East at 1.6%.
Overall Decline
Overall, the national index is 18.6% lower than its highest level in 2007. Dublin residential property prices are 22.3% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 22.3% lower than their May 2007 peak.
Recovery
Property prices nationally have increased by 81.6% from their trough in early 2013. Dublin residential property prices have risen 92.5% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 78.8% higher than at the trough, which was in May 2013.
Irish retail sales values grew by 4.7% in the first quarter of the year when compared with the same period in 2018, aided by a ‘mild late winter’ and ‘early spring’, research showed.
While these figures are robust, it must be highlighted that in this period last year, Ireland found itself under a blanket of snow and was suffering the disruptive effects of Storm Emma, according to Retail Ireland latest Retail Monitor which the group published today.
“After a rocky fourth quarter of 2018, in which trade ebbed and flow almost by the day, retailers will be hoping that a level of consistency to trade can be found in 2019,” Thomas Burke, director of Retail Ireland, said.
“It is clear that retail sales patterns in the second half of 2018 were heavily impacted by Brexit related commentary.”
Brexit Extension
The Ibec group that represents the sector, highlighted in its report that an extension to the Brexit negotiating period until October seems to ‘have calmed nerves somewhat’.
“The daily game of brinkmanship is no longer leading news bulletins, and for hard-pressed Irish retailers this is good news. On the back of this we have seen an uptick in consumer sentiment as people’s worst fears of a crash out Brexit, have been allayed, at least for the moment.” Burke added.
There has also been a modest uptick in consumer confidence this quarter coming off the back of some respite from Brexit uncertainty which is reflected in the sales data.
Supermarkets and Convenience Stores
The report showed, that primary driver for volume over value growth continues to be ‘competitive action’ for supermarkets, with the battle for market share between multiples ‘very intense’ and the ‘slower but inexorable’ continuing growth of discounters also contributing to downward pressures.
A buoyant economy has been good news for the convenience sector, which is also in growth, the research indicated.
The Monitor also shows that while sales are up across almost all categories of retail, the ever-present trends of discounting and the continuing shift to online are also evident, particularly in retail categories such as computers and electrical goods and department stores.
In terms of the outlook for the remainder of the year, Burke highlighted that many businesses will have budgeted against the performance of Summer 2018.
“For those categories that are particularly reliant on good weather to drive footfall and sales, clearly this will prove challenging. With no guarantee of a similar prolonged spell of fine weather retailers will have to be creative if they are to achieve such heights once more.” he concluded.
Construction activity rose sharply in April while purchasing inventory also ratcheted up as companies seek to avoid Brexit-related supply disruptions, according to a survey from Ulster Bank.
The bank’s construction purchasing managers index (PMI) showed that business levels continue to rise underpinned by ongoing increases in the demand for construction work.
But Brexit still weighed on confidence and some companies surveyed noted lower demand while others said they would brought forward purchases to mitigate potential supply issues.
“Nevertheless, the April PMI indicate that construction remains the fast growing major sector of the economy, with growth continuing to outpace that reported in both manufacturing and services where international risks and headwinds, including those linked to Brexit, represent more of a challenge,” said Simon Barry, Ulster Bank’s chief economist in the Republic.
Housing, as opposed to commercial or civil engineering activity, recorded the fastest rise in activity for the fourth successive month during April. Commercial activity also increased, though at the slowest pace in six months while civil engineering activity declined.
Extra staff
Meanwhile, while job creation was quicker than the series average, employment growth eased slightly during April despite the fast rise in new business. “Anecdotal evidence from panellists indicated that extra staff had been hired in order to keep up with customer demand,” the survey said.
On pricing, the rate of input cost inflation slowed to a four-month low although there were reports of greater prices paid for steel, insulation and transport while left cost burdens high.
Overall, Irish construction companies picked up from a 68-month low during April, with just over 40% of those surveyed expecting activity to increase over the coming year. The relative positivity was linked to forecasts of increased sales activity, new capital investments and subsidence of Brexit uncertainty over the next 12 months.
The PMI rose to 56.6 in April, up from 55.9 in March.
The data from business and credit risk analyst, CRIF Vision-net, show an average of almost 71 new companies were formed every day in the first quarter of 2019, while the number of insolvencies remained consistent for the same period.
In total, 6,413 new companies were formed in Ireland in the first quarter of 2019, the best Q1 figures in the past 13 years, up almost 14% on the previously record-breaking Q1, 2018.
Professional services was the biggest contributor to new start-ups in the quarter which saw 1,448 new start-ups representing a 22% increase on this time last year.
Social and personal services grew by 50% with 945 new companies, while the third largest sector was financial services which, however, fell by 1% to 708 new start-up companies (compared to 715 in Q1 2018).
Construction saw a modest 1% growth during this time.
In total, 12 counties recorded double-digit growth in start-ups in Quarter One with Dublin recording the highest number, 3,089, amounting to almost 50% of the total number of start-ups established.
Cork followed with 690 new companies in the first quarter, up 13.3%, with Galway coming in third with 236 new start-ups, down by just 1.2% on the first quarter of 2018. Limerick saw 210 new start-ups created, representing a 7.7% increase on the same period last year.
The growth in company start-ups wasn’t limited to the counties with the largest urban populations. Louth (up 21%), Donegal (up 16.5%), Kerry (up 7%), Wicklow (up 14%) and Wexford (up 38%) all saw significant increases in new company start-ups.
2018 saw an almost 26% year-on-year drop in insolvencies when compared to 2017 and in the first quarter of this year, insolvencies have remained relatively low at 192, equating to an average of two a day.
It compares to a total of 186 in the same period for 2018.
Wholesale and retail was the most insolvent sector in the first three months of 2019 with 31 recorded insolvencies, up 34.8% on the Q1 figures for 2018. It was equalled by professional services also with 31 recorded insolvencies, up 10.7% on the first quarter of 2018 and was followed by the construction sector with 25 recorded insolvencies, down by 13.8% on Q1 2018.
Dublin was the most insolvent county for the period (84, up 9%), followed by Galway (14, up 133%) and Cork (13, down 43.5%).
However, counties Clare, Carlow, Mayo, Westmeath, Waterford, Kilkenny, Tipperary and Laois all recorded fewer than five insolvencies in the first quarter of this year and the number of insolvencies in counties Sligo and Offaly went down by 100% when compared to the same period in 2018.
In the year to July, residential property prices at national level increased by 10.4%. This compares with an increase of 11.9% in the year to June and an increase of 11.6% in the twelve months to July 2017.
In Dublin, residential property prices increased by 7.2% in the year to July. Dublin house prices increased 6.5%. Apartments in Dublin increased 11.0% in the same period. The highest house price growth was in Dún Laoghaire-Rathdown, at 9.8%. In contrast, the lowest growth was in South Dublin, where house prices increased 5.2%.
Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 13.7% higher in the year to July. House prices in the Rest of Ireland increased 13.1% over the period. The Mid-West region showed the greatest price growth, with house prices increasing 23.7%. The Border region showed the least price growth, with house prices increasing 6.0%. Apartment prices in the Rest of Ireland increased 18.7% in the same period.
Overall Decline
Overall, the national index is 18.8% lower than its highest level in 2007. Dublin residential property prices are 21.8% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 23.1% lower than their May 2007 peak.
Recovery
From the trough in early 2013, prices nationally have increased by 81.3%. Dublin residential property prices have increased 93.8% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 76.9% higher than the trough, which was in May 2013.
Ireland Consumer Confidence was reported at 107.6 in July from 102.1 in the previous period. It was expected at 101.5.
Consumer Confidence in Ireland increased to 107.60 Index Points in July from 102.10 Index Points in June of 2018. Consumer Confidence in Ireland averaged 87.92 Index Points from 1996 until 2018, reaching an all time high of 130.90 Index Points in January of 2000 and a record low of 39.60 Index Points in July of 2008.
In Ireland, the Consumer Sentiment Index survey covers a minimum of 1,100 households across all regions of the country. The questionnaire assesses respondents’ perceptions on the general economy in the previous 12 months as well as expectations for next 12 months; perceptions of recent trends in unemployment and inflation; recent trends and likely future evolution in the household’s financial situation as well as savings and major purchases intentions. The Consumer Sentiment Index is calculated as the percentage of favourable replies minus the percentage of unfavourable replies, plus 100. The indicator varies on a scale of 0 to 200; a value of 0 indicates extreme lack of confidence, 100 neutrality and 200 extreme confidence. This page provides the latest reported value for – Ireland Consumer Confidence – plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news. Ireland Consumer Confidence – actual data, historical chart and calendar of releases – was last updated on August of 2018.
source: tradingeconomics.com
The seasonally adjusted unemployment rate for April 2018 was 5.9%, down 0.1% from the revised rate of 6.0% in March 2018 and down from 6.8% in April 2017. The seasonally adjusted number of persons unemployed was 140,300 in April 2018, down from 143,500 when compared to the March 2018 figure and a decrease of 16,700 when compared to April 2017.
Summary points for April
In the year to February, residential property prices at national level increased by 13.0%. This compares with an increase of 12.0% in the year to January and an increase of 9.7% in the twelve months to February 2017.
In Dublin, residential property prices increased by 12.7% in the year to February. Dublin house prices increased 12.3%. Apartments in Dublin increased 14.5% in the same period. The highest house price growth was in Dublin City, at 14.2%. In contrast, the lowest growth was in Dun Laoghaire-Rathdown, where house prices increased 9.6%.
Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 13.3% higher in the year to February. House prices in the Rest of Ireland increased 13.1% over the period. The Midland region showed the greatest price growth, with house prices increasing 14.8%. The South-East region showed the least price growth, with house prices increasing 8.6%. Apartment prices in the Rest of Ireland increased 14.6% in the same period.
Overall Decline
Overall, the national index is 21.8% lower than its highest level in 2007. Dublin residential property prices are 23.0% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 27.5% lower than their May 2007 peak.
Recovery
From the trough in early 2013, prices nationally have increased by 74.6%. Dublin residential property prices have increased 90.6% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 66.7% higher than the trough, which was in May 2013.
The economy grew by 7.8% of GDP last year, according to preliminary estimates from the Central Statistics Office, making it the European Union’s fastest-growing economy for the fourth year in a row.
Measured by GNP, the economy grew by 6.6% in 2017, the CSO said.
The CSO said that Modified Domestic Demand – a new measure used in Ireland to remove the distorting effects of foreign multinational companies – showed growth of 3.9%.
This suggests that the wider economy is feeling little initial impact from Brexit.
Today’s figures show that Personal Consumption Expenditure grew by 1.9%. This is regarded as an important barometer of the performance of the domestic economy.
Consumer spending on goods increased by 4.6%, while spending on services was marginally negative at -0.1%.
The CSO said that industrial output grew by 8.9%. In the ICT sector output increased by 16.8%, while financial and insurance output fell slightly, down by 0.7%.
Capital investment showed a drop of 22.3% last year, driven by a lower level of Intellectual Property imports when compared with the exceptionally high level of such imports in 2016.
The country’s balance of payments recorded a strong surplus of €37.1 billion, or 12.5%, of GDP.
This compared to a surplus of €9.1 billion in 2016, and €28.6 billion in 2015. The series was also affected by the large level of IP imports in 2016.
The relevance of using GDP as an accurate measure for such an open economy as the Irish economy was called into question when 2015 growth figures were adjusted up after a massive revision to the stock of capital assets related to the large multinational sector here.
While other more stable data point to very strong growth in the real economy, last year net exports were flattered greatly by the absence of large imports of intellectual property and aircraft leasing activity, which have skewed data in the past.
That pushed GDP up 10.9% year-on-year in the third quarter, revised slightly higher today.
This meant annual growth stood at 8.4% in the final three months of the year.
The economy expanded by 3.2% on a quarterly basis from October to December, compared with 4.8% in the previous quarter.
Ireland has rebounded from an economic crash a decade ago that pushed it into an international bailout in 2010, and the momentum has continued into this year with unemployment falling to 6.1% from a peak of 16% during the the crisis.
Data yesterday showed that employment – which analysts say is the cleanest gauge of Irish growth – was just shy of the 2007 peak at 2.23 million at the end of 2017 following a sharp rise in jobs growth in the fourth quarter.
Seasonally adjusted, the volume of retail sales decreased by 0.6% in the month of January, with an annual increase of 1.3%. If Motor Trades are excluded, there was an increase of 1.1% in the volume of retail sales in January 2018 when compared with December 2017 and there was an increase of 5.7% in the annual figure.
The sectors with the largest monthly volume decreases were Department Stores (-4.2%) and Motor Trades (-0.9%). The sectors with the largest month on month volume increases were Other Retail Sales (18.4%) and Pharmaceuticals,Medical & Cosmetic Articles (8.1%).
There was an increase of 0.7% in the value of retail sales in January 2018 when compared with December 2017 and there was an annual decrease of 0.7% when compared with January 2017. If Motor Trades are excluded there was an increase of 0.8% in the month and an increase of 3.2% in the annual figure.
CSO reports
Ireland is the world’s eighth-most “inclusive” advanced economy, based on a measure from the World Economic Forum (WEF), which looks beyond economic growth data to examine living standards, environmental sustainability and protection of future generations from indebtedness.
The ranking marks an improvement on Ireland’s 12th place among 29 advanced economies in a previous report published by the WEF, organisers of the annual Davos conference taking place this week.
“Our reliance on GDP [gross domestic product] of national economic achievement is fuelling short-termism and inequality, and leaders must urgently move to a new model of inclusive growth and development,” according to the WEF report, published on Monday, on the eve of the four-day gathering in the Swiss ski resort.
“Decades of prioritising economic growth over social equity has led to historically high levels of wealth and income inequality and caused governments to miss out on a virtuous circle in which growth is strengthened by being shared more widely and generated without unduly straining the environment or burdening future generation,” it said.
The WEF gathering of the world’s political and corporate leaders, alongside a smattering of celebrities, at Davos every year since 1971 has itself been criticized over the decades for its perceived elitist nature.
This year’s attendees include US president Donald Trump, Taoiseach Leo Varadkar, Minister for Finance Paschal Donohoe, French president Emmanuel Macron along with Bank of America chief executive Brian Moynihan, Microsoft CEO Satya Nadella, actress Cate Blanchett and musician and producer Will.i.am.
Norway has topped the list of the worlds’ most inclusive advanced economies, followed by Iceland, Luxembourg, Switzerland and Denmark. The UK came in 22nd and the US 23rd, with Italy, Portugal and Greece taking the bottom three slots on the list of 29 countries.
The index looks at a series of gauges, from GDP per capita to life expectancy, employment rates, median income, public debt, carbon emissions based on the size of the economy and ratio of the young and elderly depending on people in the workforce.
Article in the Irish Times
The seasonally adjusted unemployment rate for December 2017 was 6.2%, down from the revised rate of 6.4% in November 2017 and down from 7.5% in December 2016.
The seasonally adjusted number of persons unemployed was 146,700 in December 2017, down from 149,900 when compared to the November 2017 figure and a decrease of 26,900 when compared to December 2016.
Summary points for December
CSO reports
It is estimated that Irish shoppers spent an extra €90m on groceries over the festive period, according to the latest grocery market share figures from Kantar Worldpanel in Ireland, published today for the 12 weeks ending 31 December 2017.
Among the retailers, Dunnes Stores remained the top Irish supermarket. The grocer captured a market share of 23.0% – up 0.3 percentage points on this time last year – and achieved its strongest sales growth since May 2017, up 4.9%. Dunnes Stores’ customers remain loyal to the store, with perks such as the ‘Shop and Save’ campaign encouraging customers to add extra items to their shopping baskets.
Tesco also performed strongly, achieving its highest sales growth since February 2011, up 5.8%. The supermarket’s impressive growth helped it increase its market share by 0.5 percentage points compared to this time last year, and it now stands at 22.8%. SuperValu clocked in sales growth of 2.0%, with the grocer encouraging customers to spend an extra 70 cents every time they shop.
Historically, Kantar say shoppers have chosen to trade up over the Christmas period, however, Lidl seems to have broken the trend this year. The retailer enjoyed a positive performance over the Christmas period, with market share rising to 10.4% thanks to sales growth of 4.8%. While Aldi saw sales rise by 0.9% this was below the overall market level and led to a slight dip in market share – down 0.3 percentage points compared to this time last year.
According to the figures, the trend towards online shopping is showing no signs of slowing down. Online grocers experienced impressive sales growth of 24%, which boosted their share of the market to a record 2.3% over the Christmas period. Although grocery e-commerce shoppers haven’t increased in number, customers who already shop online have upped the frequency of their purchases with, on average, one extra order placed over this period.
Commenting on the figures, Director at Kantar Worldpanel, David Berry said, “Over the Christmas period the average household spent a record €1,532 on groceries – an increase of €38 compared to last year. Much of this increase has been driven by staple items, with fruit, vegetables, meat and poultry posting a combined sales increase of €28m. Shoppers were also partial to a Christmas tipple with sales of alcohol up almost 6% – a boost of €13 million. Wine was the drink of choice this year with white wine and red wine sales up an impressive 10% and 12% respectively.”
Article in the www.businessworld.ie
In the year to November, residential property prices at national level increased by 11.6%. This compares with an increase of 11.8% in the year to October and an increase of 9.2% in the twelve months to November 2016.
In Dublin, residential property prices increased by 11.3% in the year to November. Dublin house prices increased 11.5%. Apartments in Dublin increased 11.8% in the same period. The highest house price growth was in Dublin City, at 13.3%. In contrast, the lowest growth was in Dun Laoghaire-Rathdown, with house prices rising 10.8%.
Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 11.7% higher in the year to November. House prices in the Rest of Ireland increased 11.6% over the period. The West region showed the greatest price growth, with house prices increasing 16.0%. The Mid-West region showed the least price growth, with house prices increasing 8.9%. Apartment prices in the Rest of Ireland increased 13.2% in the same period.
Overall Decline
Overall, the national index is 23.1% lower than its highest level in 2007. Dublin residential property prices are 24.1% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 29.2% lower than their May 2007 peak.
Recovery
From the trough in early 2013, prices nationally have increased by 71.6%. Dublin residential property prices have increased 88.1% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 62.8% higher than the trough, which was in May 2013.
CSO reports
The volume of retail sales increased by 2.6% in the month of November, with an annual increase of 6.8%. If Motor Trades are excluded, there was an increase of 1.9% in the volume of retail sales in November 2017 when compared with October 2017 and there was an increase of 7.6% in the annual figure.
The sectors with the largest monthly volume increases were Electrical Goods (14.5%), Department Stores (6.7%) and Other Retail Sales (5.7%). The sectors with the largest month on month volume decreases were Pharmaceuticals Medical & Cosmetic Articles (-11.2%), Bars (-1.5%) and Books, Newspapers and Stationery (-1.2%).
There was an increase of 2.6% in the value of retail sales in November 2017 when compared with October 2017 and there was an annual increase of 4.4% when compared with November 2016. If Motor Trades are excluded there was an increase of 1.2% on the month and an increase of 4.5% in the annual figure.
CSO reports
The volume of retail sales was up 4.5% in October compared with the same period last year, but was flat compared with September, the latest figures from the Central Statistics Office show.
If motor trades are excluded, there was a decrease of 0.3% in the volume of retail sales in October compared with September, and there was an increase of 6% in the annual figure.
The sectors with the largest monthly volume increases were pharmaceuticals, medical and cosmetic articles (7.3%); fuel (1.3%); and clothing, footwear and textiles (1.3%).
The sectors with the largest month-on-month volume decreases were books, newspapers and stationery (-2.5%); electrical goods (-2.1%); and other retail sales (-2.1%).
There was a decrease of 0.1% in the value of retail sales in October compared with September and there was an annual increase of 2.5% compared with October last year.
If motor trades are excluded, there was a decrease of 0.3% on the month and an increase of 3.7% in the annual figure.
An analyst with Davy said the data showed “something of a pause in growth” last month, but that the outlook “remains positive” with employment and wages continuing to grow strongly.
Merrion economist Alan McQuaid said retail sales “remain erratic” on a monthly basis, but that the underlying trend is “positive”.
“While most attention has been on new car sales in the past couple of years, which will be lower in 2017 than 2016, personal spending in other areas has picked up over the same period and is becoming more broad-based,” he said.
“Despite the fluctuation in consumer sentiment since the start of last year, overall personal spending was quite robust in 2016, with headline sales up 6.7% on average in volume terms, albeit lower than the 9.5% rise posted in 2015.”
Mr McQuaid said that even allowing for the weakness in sterling since last year’s Brexit referendum, which has enticed some shoppers to spend in Northern Ireland, retail sales in the Republic “have held up quite well”.
“Indeed, VAT receipts for the year to date are running ahead of official Department of Finance expectations,” he said.
“However, with the pound still very weak in relative terms, the worry for retailers is that more and more shoppers will head North between now and year-end, especially for the busy Christmas period.
“Still, personal spending growth is expected to be positive again in 2017, boosted by the continued fall in unemployment, but with the overall increase in headline sales likely to be lower than last year.
“Taking all the factors into account, we are now forecasting headline retail sales volume growth of around 3.5% in 2017.”
Article in the Irish Times
In the year to September, residential property prices at national level increased by 12.8%. This compares with an increase of 11.8% in the year to August and an increase of 8.0% in the twelve months to September 2016.
In Dublin, residential property prices increased by 12.2% in the year to September. Dublin house prices increased 12.4%. Apartments in Dublin increased 11.4% in the same period. The highest house price growth was in Dublin City, at 13.9%. In contrast, the lowest growth was in Dun Laoghaire-Rathdown, with house prices rising 9.9%.
Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 13.2% higher in the year to September. House prices in the Rest of Ireland increased 12.8% over the period. The West region showed the greatest price growth, with house prices increasing 16.5%. The Mid-West region showed the least price growth, with house prices increasing 9.8%. Apartment prices in the Rest of Ireland increased 15.5% in the same period.
Overall Decline
Overall, the national index is 23.7% lower than its highest level in 2007. Dublin residential property prices are 24.5% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 29.9% lower than their May 2007 peak.
Recovery
From the trough in early 2013, prices nationally have increased by 70.2%. In the same period, Dublin residential property prices have increased 87.0% whilst residential property prices in the Rest of Ireland are 61.4% higher.
CSO reports
Budget 2018 – Key Points
Minister for Finance Paschal Donohue delivered the Budget 2018 speech this afternoon, with the announcement of additional revenues of €830 million to bring the total package of new spending and tax cuts to €1.2 billion. €898 million of this will be allocated to spending and there will be tax reductions worth €335 million.
Economy
Incomes and Benefits
Commercial Property
Housing
Brexit
Aside from the obvious impact on the portfolio values of the existing holders of commercial real estate, the decision to treble the rate of stamp duty on commercial property deals overnight will have a seriously unsettling effect on any current transactions. We also expect that it will reduce the number of transactions, as the cost of trading increases, thus encouraging longer holds.
One particular concern is the potential effect of this increase on the nascent Build-to-Rent (PRS) sector. The proposed rebate on residential development sites is expected to be minor relative to the negative impact on end values of completed properties. This important sector is still in its infancy in Ireland but has the capacity to provide considerable housing stock in urban areas. With housing provision central to the Government’s agenda for 2018, it may have been wiser to exclude this sector from the stamp duty hike altogether. We await clarification on this point.
On a positive front, although the income tax cuts are small, they do indicate to Irish consumers that the days of austerity budgets are now firmly behind us. This combined with further gains in employment and economic growth bodes well for continued growth in the retail sector.
A focus on speeding up the delivery of housing is also broadly welcomed, as this will have a knock-on effect on Ireland’s attractiveness in terms of Brexit relocation decisions, which will benefit the office sector as well as the wider economy. We also welcome the reduction in the holding period for CGT relief from seven to four years, given its potential to free up land for development together with allowing early cycle investors to exit positions without attracting tax on value gains. This in turn should add stock to the market where demand is outstripping supply for quality investment assets.
Kate Ryan, Research Analyst
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Reports (PDF):
Budget 2018 Statement of the Minister for Finance and Public Expenditure and Reform
Property Industry Ireland – IBEC – Pre-Budget Submission 2018
Consumer Sentiment Index Irish Economy
Irish consumer sentiment recovered in September after August’s modest decline, signalling that confidence among Irish households remains on a positive if somewhat uneven path. While the monthly increase in the sentiment index of 2.9 points was not particularly large, it was sufficient to push the September sentiment survey to its strongest level since February 2016.
We would emphasise the positive nature of the September sentiment reading but would interpret this as pointing towards some easing in fears and emerging optimism rather than the arrival of euphoria. The September survey suggests that Irish consumers now see the economic glass as half full. It does not imply they see themselves at a party where the punchbowl is overflowing.
As the red line in diagram 1 below illustrates, monthly readings on Irish consumer sentiment have been fairly ‘choppy’ in recent years reflecting the uneven nature of the Irish economic upswing and the degree of uncertainty that surrounds developments such as Brexit.
Diagram 1 also suggests that this year has seen a gradual unwinding of the nervousness that followed the UK’s decision to leave the EU as a feared sharp, speedy and broadly based deterioration in Irish economic conditions failed to materialise. Instead, the evidence to this point suggests that the Irish economy has remained on a solid growth trajectory thus far in 2017.
Significant risks still cloud the global environment and, for the average Irish household, income gains have been limited. Indeed, a notable feature of the upswing is that jobs growth continues to outpace wage growth even though the unemployment rate has fallen considerably. So, the labour market improvement has been jobs intense but not felt extensively in the shape of notably faster wage growth to this point.
As a result, the improvement in consumer sentiment has been modest and somewhat erratic in terms of its monthly path. In that respect, the sentiment survey suggests that from the perspective of the average consumer, the Irish economy is clearly improving but it still feels undercooked rather than overheating.
A number of factors may explain the monthly rise in Irish consumer sentiment in September which was concentrated in those parts of the survey focussed on household finances. One influence could be the early September confirmation that the repayment of water charges would be largely completed before end-year. In circumstances where cash flow is still constrained for many households, this development might be expected to prompt a more positive assessment of personal financial circumstances.
We also think that a sharp increase in the exchange rate of the Euro against both Sterling and the US Dollar through August may have increased perceptions of household purchasing power. Such currency considerations could also be consistent with a slightly less positive assessment of the broader outlook for the Irish economy last month.
A divergence in thinking as to the ‘macro’ and personal implications of an economic development is unusual but we think the better than feared experience of the past year may have made Irish consumers less inclined to mechanically downgrade the outlook for their household finances in response to a stronger Euro exchange rate (Interestingly, the September UK consumer confidence reading showed consumers there less optimistic about their household finances but slightly less negative about the economic outlook, a set of outcomes that could be consistent with the contrasting impact of a weaker Sterling on UK spending power and competitiveness) .
The details of the September survey show four of the five main components recording stronger readings than in August. However, there was a modest decline in expectations for the general Irish economic outlook although it should be added that the September reading is still very positive. Our sense is that this likely owed something to concerns about the impact of a stronger exchange rate as the limited number of economic releases and forecasts through the survey period were broadly positive. This result may also have partly reflected a correction following a particularly strong reading in this element of the survey in August.
A continuing fall in unemployment and a pick-up in annual earnings growth in official data, coupled with ongoing new job announcements, likely supported a slight improvement in consumers’ thinking in regard to the outlook for the labour market in September in spite of the slightly weaker assessment of broader economic prospects.
The September sentiment survey was notable for stronger readings in all three components related to household finances including the assessment of the current buying climate. After a weakening in these areas in August, some rebound is not entirely surprising but the September reading marks the most positive assessment of personal financial circumstances in nineteen months.
We don’t think that Irish consumers have suddenly woken up to a marked improvement in their household finances. However, some specific developments through the survey period may have prompted a little more optimism in this regard. As noted above, we think the anticipation of the looming repayment of water charges and the prospect of cheaper imported goods and foreign travel likely contributed to this result. Continuing gains in house prices might also supported sentiment as, in aggregate, the positive wealth effects perceived to accrue to the stock of property owners likely exceeded the greater financial struggle faced by would-be buyers.
Our sense is that the strong sentiment result for September was not fuelled by expectations of a ‘giveaway’ budget on October 10th. Most media coverage of the upcoming budget through the survey period emphasised the limited scope for any material concessions in terms of tax, welfare payments or other aspects likely to directly affect household finances. If expectations of Budget giveaways were driving the September survey result, we would also expect that fiscal largesse to boost consumers ‘ assessments of Irish economic prospects. So, there is little suggestion in the survey of any great anticipation that Minister Donohoe will deliver a broadly felt uplift in consumers’ fortunes next week.
The broad picture emerging from the September sentiment survey is still one of limited gains in consumers’ incomes but there is also a sense that consumers are now more attuned to the possibility of positive surprises. The key question is whether the upcoming budget and, more generally, the uncertain economic environment that defines the ‘new normal’ will allow Irish consumers to continue to travel hopefully and help to underpin a virtuous circle in consumer sentiment and spending.
Commenting on the results Conor O’Toole, ESRI, said:
“Overall consumer sentiment has improved since August and households are beginning to report an improvement in their personal economic circumstances. Coupled with an increased positivity towards making large purchases, the trend generally points to a sustained improvement in the consumer environment.”
In addition, Austin Hughes, KBC Bank Ireland, noted:
“The pick-up in consumer sentiment in September to an 18 month high is very positive but it doesn’t reflect any dramatic improvement in the circumstances of the typical Irish consumer last month. The reality is that confidence has been trending higher, albeit erratically, through 2017 as Brexit related fears eased because of the notably better than expected performance of the Irish economy. The September survey suggests Irish consumers may now see the economic glass as half-full but a still uncertain environment and limited gains in incomes mean it is far from overflowing.”
“The most notable feature of the September survey is the improvement in perceptions of household finances. Our sense is that this was prompted by some specific developments, notably the confirmation of the looming repayment of water charges and the prospective boost to spending power caused by the strengthening of the Euro against Sterling and the US Dollar through August.”
Reported by The Economic and Social Research Institute
Seasonally adjusted, the volume of retail sales increased by 11.9% in the month of July, with an annual increase of 2.1%. If Motor Trades are excluded, there was a decrease of 0.2% in the volume of retail sales in July 2017 when compared with June 2017 and there was an increase of 7.0% in the annual figure.
The sectors with the largest monthly volume increases were Motor Trades (7.0%), Clothing, Footwear & Textiles (3.2%) and Bars (2.6%). The sectors with the largest month on month volume decreases were Non-Specialised Stores (-2.2%), Books, Newspapers and Stationery (-1.7%) and Furniture and Lighting (-1.0%).
There was an increase of 8.9% in the value of retail sales in July 2017 when compared with June 2017 and there was an annual decrease of 0.3% when compared with July 2016. If Motor Trades are excluded there was a decrease of 0.4% and an increase of 3.3% in the annual figure.
Irish consumer sentiment held broadly steady in July as an improved buying climate, likely boosted by summer sales and holiday spending plans, contrasted with a more cautious assessment of household finances. At current levels, the survey paints a reasonably positive picture of Irish economic conditions but also continues to highlight concerns about consumers’ personal financial circumstances.
The KBC Bank/ESRI Consumer Sentiment Index stood at 105.1 in July, effectively unchanged from the June reading of 105.0 but that marginal increase – which isn’t statistically significant- means last month’s results were the strongest since February 2016.
This is an encouraging result and one that is consistent with the positive trajectory of most recent Irish economic indicators. However, we would caution that the onset of back to school and other seasonal costs, coupled with likely efforts to downplay the scope for positive news in the upcoming Budget 2018 means there may be scope for somewhat weaker sentiment readings in coming months.
The positive Irish sentiment reading for July contrasted with weaker results for comparable surveys elsewhere as consumers in these jurisdictions re-evaluated their situations and prospects. In the case of Ireland, our sense is that Irish consumers had braced themselves for some fallout from Brexit and/or changed US economic policies but the first half of 2017 has proven notably less traumatic for the Irish economy than may have been feared. However, in other countries, earlier hopes may have given way to varying degrees of disappointment of late.
In the US, consumer sentiment continued the trend decline of recent months away from the January ‘Trump honeymoon’ peak as consumers continue to revise down expectations both for the economy and their household finances in spite of relatively healthy current economic conditions. In the Euro area, July saw a slight correction of the strongly improving recent trend with a softer French reading hinting that notably increased optimism about political progress has run well ahead of the current circumstances of most consumers.
In the UK, a further drop in consumer confidence last month to the lowest level since the Brexit vote appears to reflect weaker economic conditions of late and the particular erosion of household spending power through higher inflation. As a result, this July’s result implies that earlier consumer optimism about UK economic prospects now seems to be undergoing a marked re-assessment.
While the headline Irish Consumer Sentiment Index for July was little changed from June, there were some contrasting movements in the key components of the survey. After a notable improvement in the June survey, the two principal ‘Macro’ elements of the July survey held broadly steady in July. In recent months, Irish consumers appear to have taken on board a continuing sequence of better than expected indicators and upwardly revised forecasts for the Irish economy.
As a result, the Irish economic environment in mid-2017 while still beset by uncertainty appears far less immediately threatening than previously envisaged. This translates into positive views on the Irish economic outlook outnumbering negative views by three to one in July whereas the split was two to one six months ago and somewhat less than that twelve months ago.
While Irish consumers remained more confident about the general economic outlook and the prospects for employment in July, they were a little more cautious about their own personal finances than in June. Our sense is that this reflects limited income growth and the perception that they are not sharing adequately in the widely heralded economic recovery. The monthly changes in this area of the survey were modest in July but they show a modest drop in numbers reporting stronger household finances in the past year and a slight increase in numbers expecting weaker household finances in the coming year. It remains the case that only about one in four consumers are reporting improvements in their past or future financial circumstances.
Although the bulk of the July sentiment survey was taken before the latest national accounts data were published on July 14th, the details of that release appear to offer some support for the view that the average Irish household may have fallen somewhat behind the pace of recovery in the Irish economy as a whole. Not only did these data show that compensation of employees is on a notably weaker trajectory than many had envisaged but, as the diagram below illustrates, the share of national economic income going to households has declined progressively in recent years to the point where it now stands well below historic norms. As the diagram suggests, the recent decline in the share of household income in national income is not simply a reflection of the increased role of multinationals in the economy. The share of household income in GNI* (the metric chosen to adjust for exceptional multinational activities) has also fallen through the recovery.
In such circumstances, it may seem slightly surprising that the most positive element of the July sentiment survey related to spending plans. We think this reflects a response to further price discounting in summer sales as well as planned spending on summer holidays. As such, we think this pick-up is likely temporary in nature and we would expect some pull-back in this area of the survey in coming months.
That said, we take the view that the spending plans component of the July survey may be picking up some key elements of the ‘new normal’ for Irish consumers. One element is a tendency towards ‘compressed’ spending for big ticket items that means such purchases are increasingly concentrated at sale time or in response to heavy price discounting.
Of course, this pattern is also consistent with the reality that many households have a relatively fixed amount of money income and how far that goes each month depends on price movements. Either way, these developments speak of a notably increased price sensitivity on the part of Irish consumers in recent years (a trend that shows up statistically in a notably increased negative correlation between monthly price and volume changes in retail sales data).
A second aspect of the ‘new normal’ appears to be increased travel related spending. The bounce in spending plans may partly be due to lower costs- according to CSO, June air travel costs were 7.6% lower than a year earlier. As a result, it may be vulnerable to a correction in the August data as air fares rebounded in July to stand 1% higher than a year ago.
We don’t think cost factors fully explain an increased tendency towards travel related spending of late. It may signal a greater level of confidence on the part of consumers that the Irish economy and household finances are on a more sustainable trajectory. Of course, it may also speak of a broader change in consumer preferences that places increased emphasis on getting a break from circumstances that are still challenging for many Irish households.
In the year to June, residential property prices at national level increased by 11.6%. This compares with an increase of 11.1% in the year to May and an increase of 5.5% in the twelve months to June 2016.
In Dublin, residential property prices increased by 11.1% in the year to June. Dublin house prices increased 11.2%. Whereas apartments increased 10.6% in the same period. The highest house price growth was in South Dublin, at 11.8%. In contrast, the lowest growth was in Fingal, with house prices rising 5.4%.
Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 11.8% higher in the year to June. House prices in the Rest of Ireland increased 11.8% over the period. The South-East region showed the greatest price growth, with house prices increasing 16.7%. The Mid-West region showed the least price growth, with house prices increasing 8.4%. Apartment prices in the Rest of Ireland increased 13.4% in the same period.
Overall Decline
Overall, the national index is 29.0% lower than its highest level in 2007. Dublin residential property prices are 29.9% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 34.6% lower than their May 2007 peak.
Recovery
From the trough in early 2013, prices nationally have increased by 58.4%. In the same period, Dublin residential property prices have increased 73.8% whilst residential property prices in the Rest of Ireland are 50.4% higher.
“Growth in sales during Q2 2017 outstrips growth in footfall”
Our last quarterly update (Q1 2017) showed a mix of footfall growth and sales contraction for the Bannon Shopping Centre Portfolio. The numbers for Q2 2017 were much more positive with growth in footfall and sales of +0.37% and +2.44% respectively.
Q2 2017 benefited from having the full boost of the Easter period, however it was the sales growth towards the end of the quarter which really made the difference. Sales in June 2017 were 4.46% ahead of June 2016, leaving the cumulative total for the first 6 months of 2017 +0.89% ahead of the first 6 months of 2016.
The opening of Inglot, Vila and Selected in Athlone Towncentre Shopping Centre during the quarter brought the mall occupancy rate in the centre to 100% for the first time since the centre opened In Nov 2007. The total occupancy rate for the Bannon portfolio improved slightly during Q2 to 98.8%.
Shirley Delahunt, Centre Manager at Athlone Towncentre said “the opening of Inglot, Vila and Selected within the last three months is hugely encouraging for the centre and reaffirms our position as the premier shopping destination in the Midlands”.
Jennifer Mulholland, Associate Director within the Retail Lettings Department at Bannon noted that “there is strong interest from international brands and finding good quality space has become the biggest issue facing retailers”.
At present Bannon manage over 6 million square feet of retail assets with a total annual rent and service charge income of €100 million and an annual footfall of 85 million. The portfolio is made up of a range of retail assets, from large regional shopping centres to small local neighbourhood schemes.
“strong interest from international brands and finding good quality space has become the biggest issue facing retailers”
House prices over the past year have risen by more than €2,000 a month nationally, according to the latest report from property website Daft.ie.
Nationally, the average asking price has risen by 46.2% – or just under €76,000 – since their lowest point in 2013.
The national average list price during the second quarter of 2017 was €240,000, 11.7% higher than a year previously.
Over 6,000 properties were listed for sale in May, the highest monthly total since the middle of 2008.
For the first time in over two years, the annual rate of inflation in Dublin (12.3%) exceeds the rate elsewhere in the country (11.3%).
40% of properties listed currently find a buyer within four months, up from 35% a year ago.
Average list price and year-on-year change in major cities in the second quarter of 2017 –
Dublin City: €352,975 – up 12.3%
Cork City: €256,201 – up 9.2%
Galway City: €268,535 – up 13.4%
Limerick City: €177,199 – up 15.1%
Waterford City: €158,861 – up 14.5%
The report’s author, Ronan Lyons, said: “After two years where Central Bank rules had capped house price growth in the capital, the relaxation of those rules has helped drive prices further up.”
Whereas non-urban markets had driven house price growth in 2015 and 2016, Mr Lyons said Dublin again is seeing increases that are above the national average.
With each passing quarter, he said the imperative becomes even greater to address the high construction costs that are limiting the ability of supply to meet strong demand.
Martin Clancy from Daft.ie said: “Every minute over 1,000 property searches are being carried out on our website and apps, which gives an indication of the strong demand that is in the market at present.”
“Footfall across the Bannon portfolio was +0.65% in Q1 2017”
Our last quarterly update (Q4 2016) showed a strong close to 2016 for the Bannon Shopping Centre Portfolio with total footfall growth of 0.85% and total turnover growth of 3.45%. The portfolio consists of regional shopping centres in various locations across the country.
The first quarter of 2017 saw footfall growth of 0.65% but sales were back by 2.95% versus the same period in 2016. The trend improved in April with a month on month increase in sales of 3.54% bringing the yearly running total (Jan – Apr) back to -1.19%.
The annual movement of Easter each year can have quite an impact on monthly totals and this was certainly the case during the first quarter of 2017. Easter Sunday fell on the 16th April 2017 versus 27th March 2016, thus April sales (Q2 2017) benefited significantly from this year’s Easter break.
Vacancy rates across the portfolio continued to fall during Q1 2017 and this is expected to continue with several very significant deals in the pipeline for Q2 and Q3 2017.
Ray Geraghty, Divisional Director within the Property Management Department at Bannon noted that despite a string of strong national economic indicators that consumers were cautious during Q1 2017 and this impacted on sales across the board. Ray believes that the outlook for 2017 remains positive, particularly from a letting perspective and that the occupancy rate across the portfolio is nearing the holy grail of 100%.
At present Bannon manage over 6 million square feet of retail assets with a total annual rent and service charge income of €100 million and an annual footfall of 85 million. The portfolio is made up of a range of retail assets, from large regional shopping centres to small local neighbourhood schemes.
“Tentativeness during Q1 2017 not impacting on retailer enquiries and vacancy rates continue to drop”
Seasonally adjusted, the volume of retail sales decreased by 0.6% in the month of April, with an annual increase of 1.6%. If Motor Trades are excluded, there was an increase of 0.4% in the volume of retail sales in April 2017 when compared with March 2017 and there was an increase of 6.4% in the annual figure.
The sectors with the largest monthly volume decreases were Motor Trades (-1.7%), Books, Newspapers & Stationery (-1.2%). The sectors with the largest month on month volume increases were Department Stores (8.3%), Furniture & Lighting (3.9%) and Bars (1.6%).
There was a decrease of 0.9% in the value of retail sales in April 2017 when compared with March 2017 and there was an annual decrease of 0.8% when compared with April 2016. If Motor Trades are excluded, there was an increase of 0.2% in the value of retail sales and an annual increase of 3.4%.
Unadjusted indices are available on CSO Statbank.
CSO reports
The European Commission is forecasting a robust expansion of Irish gross domestic product (GDP), but at a moderating pace. The commission expects GDP to grow by 4% in 2017 and 3.6% in 2018. That growth is far above the expected euro area GDP growth of 1.7% in 2017 and 1.8% in 2018.
Earlier this week Davy Stockbrokers predicted that GDP would grow by 5% in 2017, up from their previous forecast of 3.7%.
“Today’s economic forecast shows that growth in the EU is gaining strength and unemployment is continuing to decline. Yet the picture is very different from Member State to Member State, with better performance recorded in the economies that have implemented more ambitious structural reforms”, said Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue.
Referring to the figures for 2016, when real GDP grew by 5.2%, the commission’s spring economic forecast said “some of the impressive headline figures are still heavily distorted by the activities of multinational enterprises in the country. Nevertheless, domestic activity appears to have been strong driven by positive developments in the labour market, consumption and construction investment.”
The commission expects public finances to improve but, it notes that risks to the fiscal outlook remain. In 2016, the general government deficit fell to 0.6% of GDP which “echoed the sustained pace of Ireland’s economic growth”, according to the spring forecast.
But Ireland’s growth could be hampered by “external risks”, mainly reflecting policy uncertainty and risks to the global economic outlook. The commission forecasts the government deficit to fall slightly to 0.5% of GDP in 2017 based on expectations of “robust increases in tax revenue and buoyant current primary expenditure amid public wage pressures.”
Jobs and domestic demand are expected to underpin Ireland’s economic activity. The commission forecasts a slow inflation recovery due to “upward pressure from the services sector including rapidly increasing residential rents, related to the limited supply of residential property.” However, it reports that the labour market’s better-than-expected performance, combined with continued robust wage growth and improving household balance sheets, will support consumption in 2017 and 2018.
On the trade front the commission expects exports to contribute marginally to GDP growth both this year and next despite the fact that export growth slowed last year and ultimately had a negative impact on GDP growth.
The main risks to Ireland’s macroeconomic outlook include the “considerable uncertainty” surrounding the final outcome of negotiations between the UK and the EU, “as well as potential changes to US tax and trade policies, to which Ireland is highly exposed.”
“It is good news too that the high uncertainty that has characterised the past twelve months may be starting to ease. But the euro area recovery in jobs and investment remains uneven. Tackling the causes of this divergence is the key challenge we must address in the months and years to come”, said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.
The rental market has, for over five years now, shown increasing signs of distress, with stronger demand but weaker supply each year. Market rents in Dublin, for example, are now 66% higher than at their lowest point. Outside Dublin, rents have risen 41%. A key part of the political reaction has been the introduction of Rent Pressure Zones.
This measure sits on top of existing measures, which limit the frequency with which landlords can increase rents. To be designated a Rent Pressure Zone for three years, rents in an area must increase by 7% or more annually for the majority of the last 18 months. Once a Rent Pressure Zone, rents can only increase by 4% per year.
The principal aim of RPZ’s is to protect sitting tenants from significant rent increases. While the measure is based on rents registered with the Residential Tenancies Bureau, trends in the RTB and Daft.ie are highly correlated, albeit with a slight lag in the RTB figures. If Daft.ie figures were used to calculate Rent Pressure Zones, 47 of the 54 markets covered in the report would currently be RPZ’s.
What is common to both Daft.ie and RTB measures is that they use the rent at the start of the lease – in the case of Daft.ie, it’s the listed rent, while in the case of the RTB, it’s the rent on the formal lease lodged with the bureau.
In a market where most leases lasted just one year, this kind of measure captures trends in the full rented sector well. However, if people choose not to move as regularly, it is better to think of the rented sector as divided into two categories: “movers” and “stayers”. And one of the main reasons people choose not to move regularly is if rents are rising rapidly. Therefore, the RPZ measure could be mixing things up: using trends rents paid by movers (“market rents”) to control rents paid by stayers (“sitting rents”).
Daft.ie surveyed over 4,000 tenants, asking them details about the path of rents they have paid in recent years. What we were interested in was examining the extent to which landlords have passed on rent increases faced by movers to sitting tenants. In other words, have “sitting rents” followed the same trend as “market rents”?
Since 2013, market rents nationally have risen by just over 50%. However, sitting rents have increased by just 27%. In other words, those who have stayed in the same lease have enjoyed a discount relative to market rents, with rents increasing by just half the increase seen on the market.
The implications for the system of Rent Pressure Zones are obvious. In order to control sitting rents, sitting rents themselves must be measured. It is not helpful to rely on market rents in a rented sector where now the typical lease lasts over three years.
The survey undertaken for this Daft.ie Rental Report suggests that for many – although by no means all – sitting tenants, there has been no dramatic increase in rents. This may mean that the Rent Pressure Zone system makes things worse, rather than better, by amplifying the insider-outside nature of the rented sector.
Sitting tenants now enjoy not only a discount relative to the market rent, but also protection of that lower rent into the future. Meanwhile, movers in the private rented sector face not only far higher rents but almost no availability in the market. In such a market, it would be a brave prospective tenant who would ask the landlord to see proof that the rent they would pay is only 4% higher than a year previously!
The message from the rental market to policymakers is the same as it has been for over five years now: more supply is needed. Until policymakers understand why it costs so much to build a two-bedroom apartment here, compared to anywhere else in Europe, that’s unlikely to happen.
Seasonally adjusted, the volume of retail sales decreased by 0.7% in the month of March, with an annual increase of 3.2%. If Motor Trades are excluded, there was an increase of 0.7% in the volume of retail sales in March 2017 when compared with February 2017 and there was an increase of 6.0% in the annual figure.
The sectors with the largest monthly volume decreases were Furniture and Lighting (-3.8%), Department Stores (-3.3%) and Motor Trades (-1.9%). The sectors with the largest month on month volume increases were Other Retail Sales (11.6%), Food beverages & Tobacco (1.9%) and Bars (1.3%).
There was a decrease of 0.8% in the value of retail sales in March 2017 when compared with February 2017 and there was an annual increase of 0.9% when compared with March 2016. If Motor Trades are excluded, there was an increase of 0.3% in the value of retail sales and an annual increase of 3.5%.
Foreign direct investment in the Republic is at “an all-time high” with the number of jobs advertised in the financial sector during the first quarter of 2017 up 60% year on year.
Overall jobs postings in the Cpl Resources Employment Market Monitor grew by 14% in Q1 2017, which is strong compared to quarterly growth of between 6% and 10% in each quarter of 2016.
The strongest growth for the first quarter of 2017 was in accountancy, finance and banking, which was up 60% year on year. This was the fourth quarter in a row that the sector experienced strong growth.
Growth was also strong in science, engineering and supply chain (19%).
IT jobs showed a small fluctuation but, as it was coming from a very high starting base, the change was indicative of the ongoing challenges of meeting the demand for IT candidates.
Sales and marketing jobs postings saw a small year on year decline of 7% for the first since 2014.
Nearly all employers said that anti-Brexit feeling will make the Republic more attractive to top global talent.
Cpl Resources director Peter Cosgrove said: “Potentially there will be lots of jobs coming to Ireland, especially in the financial services area. The key issue is around the inability of banks to trade the Euro once Britain is out of the EU.
“FDI investment in Ireland is at an all-time high, providing high value employment here. Also, Ireland could potentially become the only English speaking country in Europe, and as a result, will be a target for talent which would like to stay within Europe.
“However, even with the expected influx of talent, more than 60% of employers believe it is an employee’s market, meaning they are still struggling to get the staff they need at the right price.
Cpl’s research also shows that 64% of employers believe that staff are less productive when they work from home.
“It is also unfortunate that our research shows that employers are resisting and eschewing home-working,” said Mr Cosgrove.
“Presenteeism appears, still, to be an important criterion for measuring productivity despite proof it is ineffective,” he said. “If employers want to hire and keep the best talent, they need to reconsider what they can offer.”
In the year to February, residential property prices at national level increased by 10.7%. This compares with an increase of 8.1% in the year to January and an increase of 5.4% in the twelve months to February 2016.
In Dublin, residential property prices increased by 8.3% in the year to February. Dublin house prices increased 8.1%. Whereas apartments increased 9.1% in the same period. The highest house price growth was in Dublin City, at 9.2%. In contrast, the lowest growth was in Fingal, with house prices rising just 3.7%.
Residential property prices in the Rest of Ireland (i.e. excluding Dublin) were 13.2% higher in the year to February. House prices in the Rest of Ireland increased 13.1% over the period. The West region showed the greatest price growth, with house prices increasing 19.8%. In contrast, the Mid-East region showed the least price growth, with house prices increasing 9.3%. Apartment prices in the Rest of Ireland increased 13.9% in the same period.
Overall Decline
Overall, the national index is 30.7% lower than its highest level in 2007. Dublin residential property prices are 31.3% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 35.7% lower than their May 2007 peak.
Recovery
From the trough in early 2013, prices nationally have increased by 52.1%. In the same period, Dublin residential property prices have increased 67.9% whilst residential property prices in the Rest of Ireland are 47.9% higher.
As many as 50,000 jobs will be created in the country this year, employers group Ibec has predicted.
It has argued that the “exceptional jobs surge, coupled with tax cuts, wage growth and limited inflation” will boost consumer spending.
However, it warned that Brexit, formally triggered last week by the UK government, will weaken export growth.
Ibec, which released its latest quarterly economic outlook yesterday, expects the economy to grow by 3.1% this year and 2.8% in 2018.
The business employers’ group pointed out that the economy is now growing at its fastest rate since 2007, with employment outside the construction sector now back at pre-crisis levels. Short-term unemployment is now back at levels last seen in early 2006.
“We predict that an additional 50,000 jobs will be created again this year,” said Fergal O’Brien, Ibec’s director of policy and public affairs. “This exceptional jobs surge, coupled with tax cuts, wage growth and limited inflation, bodes well for consumer spending. Investment growth will also be high, at 14.8%, due to the resurgence of the construction sector.”
But Brexit and US President Donald Trump’s ‘America First’ protectionist stance are a “cause for concern” for Irish businesses, said Mr O’Brien.
The volume of retail sales decreased by 0.5% in the month of February, with an annual increase of 1.1%.
If Motor Trades are excluded, there was an increase of 1.1% in the volume of retail sales in February 2017 when compared with January 2017 and there was an increase of 5.9% in the annual figure.
The sectors with the largest monthly volume increases were Clothing, Footwear & Textiles (4.9%), Non-Specialised Stores (4.5%) and Hardware, Paints & Glass (4.3%). The sectors with the largest month on month volume decreases were Motor Trades (-5.8%), Fuel (-3.5%) and Pharmaceuticals Medical & Cosmetic Articles (-2.8%).
There was a decrease of 0.3% in the value of retail sales in February 2017 when compared with January 2017 and there was an annual decrease of 0.9% when compared with February 2016. If Motor Trades are excluded, there was an increase of 1.2% in the value of retail sales and an annual increase of 3.3%.
CSO Reports
Strong performance in Ireland’s commercial property sector continued throughout 2016, albeit at a slower pace than was seen in 2015, with total returns across all property types up 12.4% annually according to recent figures from the SCSI/IPD Ireland Quarterly Property Index.
The market picked up across all property types in Q4 following a lull in Q3, with industrial leading the way with a total return of 4.6% on quarter bringing annual returns to 19.3% year-on-year. Within this sector the strongest performing category was Industrial North Dublin, which recorded a total annual return of 20.4% driven by capital and rental value growth of 12.6% and 12.2% respectively.
Retail was a close second in Q4, returning 4.3% to bring annual growth to 12.9% relative to 2015. This growth was driven predominantly by prime high street properties on Grafton and Henry/Mary Street, which saw annual returns on investment of 17% and 16.5% respectively. Most importantly, provincial retail is finally beginning to show signs of recovery with capital and rental value growth of 6% and 5.6% driving a total annual return of 14.5%.
Office returned 3.3% in Q4 with prime City Centre properties driving growth to bring total returns to 11.9% annually. This was driven by continued strong growth in prime city centre locations, with Dublin 2 and 4 recording returns of 11% and 12% respectively.
An annual return of 12.4% is almost double the 7.6% recorded in the U.S. and more than three times the 3.5% growth recorded in the U.K., where June’s ‘Brexit’ referendum heavily impacted rental and capital value growth in the latter half of the year. This marks Ireland as one of the best performing commercial property markets again in 2016.
The main quarterly and annual results for 2016 are outlined above.
Kate Ryan, Research Department
The volume of retail sales (i.e. excluding price effects) increased by 0.9% in November compared to the previous month, CSO figures have revealed.
If Motor Trades are excluded, there was an increase of 3.1% in the volume of retail sales in November 2016 when compared with October 2016 and there was an increase of 4.9% in the annual figure.
The sectors with the largest monthly increases were Electrical goods (17%) and Pharmaceuticals Medical & Cosmetic Articles (7.9%). The sectors with the largest month on month volume decreases were Motor Trades (-1.0%) and Bars (-0.9%).
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