THE UNDERLYING weakness in the economy continued into the second quarter of the year, according to the Central Statistics Office’s most closely watched data set.
Gross domestic product was unchanged on the previous quarter, according to yesterday’s figures.
The two other most wide-ranging measures – gross national product and domestic demand – went in sharply different directions.
The former grew by 4.3 per cent on three months earlier, while the latter shrank by 5 per cent. In both cases, factors that have limited impact on overall activity in the economy account for the unusually large rates of change.
All figures cited here are adjusted for seasonal fluctuations.
Domestic demand, which registered its second-largest quarterly fall on record, was influenced by a €1 billion decline in investment in aircraft over the first quarter. The purchase of aircraft tends to be highly volatile. However, even when this effect is stripped out, domestic demand fell by almost 2 per cent on the previous quarter.
Given the unusual swings in some of the aggregates in the national accounts data, developments in the component parts help to illuminate output changes across the economy.
The volume of output fell in five out six sectors for which figures are published. Apart from industry, which grew by 5 per cent in just three months, the other five sectors all contracted quarter on quarter. Industry is the second-largest sector in the economy.
The largest single sector – private services – contracted by 1.7 per cent.
The third largest sector – distribution, transport, software and communications – shrank by 0.4 per cent.
When the headline figures are disaggregated by expenditure rather than by sectoral output, the performance of the economy is just as weak.
Spending by private consumers on goods and services continued to fall in the second quarter. A 0.4 per cent quarter-on-quarter decline brought private consumption to fresh post-crash lows.
The 3.9 per cent fall in public consumption of goods and services was the largest quarterly decline ever recorded, either before and since the recession began.
A further very large decline in investment spending, even excluding the effect of aircraft purchases, reflects both the continued decline in construction and the weakness of business sentiment.
The volume of exports also fell on the quarter, albeit by a just 0.5 per cent.
This was only the second time since late 2009 that seasonally adjusted export volumes have not grown.
Imports declined by 5.2 per cent, the largest quarter-on-quarter ever recorded. Lower imports reflect weakness in the domestic economy.
Owing to a quirk of national accounting, a fall in exports causes GDP and GNP to rise even though lower imports usually reflect economic weakness.
