Trade data is weaker than expected

FIONA REDDAN

The Central Statistics Office (CSO) this morning released weaker than expected trade data, with the trade surplus for the first ten months of the year down by 12.2 per cent, driven by a 6.4 per cent fall in exports.

In October, Ireland reported a seasonally-adjusted merchandise trade surplus of € 2,971m, € 245 million lower than September’s revised surplus of € 3,216 million (€ 3,193m). For the first 10 months of the year, the trade surplus, at € 31.8 billion, is down by 12.2 per cent on the same period in 2012.

Seasonally adjusted exports were up 0.4 per cent in the month while imports posted an increase of 6.8 per cent, which may reflect stronger personal consumer spending, according to Alan McQuaid, economist at Merrion Capital.

Comparing October this year with October 2012, the value of exports decreased by € 210 million, or 2.8 per cent, driven by a decline of € 177 million (-8.3%) in the exports of medical and pharmaceutical products, and € 67 million (-4.8%) in the export of organic chemicals.

Noting that weak global demand hit Irish exports in the past couple of years, Mr McQuaid notes that this is staring to recover, “which augurs well for Irish exports in the coming months”.

“This should to some degree help offset the negative drag from the patents expiry issue on certain pharmaceutical products,” he said.

Philip O'Sullivan, economist with Investec, said that "the weakness seen across many of Ireland's key export markets" was a disappointment.

Exports to the UK fell by 5.1 per cent, while the picture is little changed elsewhere, with other EU exports falling by 1.2 per cent, exports to the US unchanged, and a decline of 8 per cent reported for China, and 4.1 per cent for the rest of the world.

“While the international backdrop has picked up in recent quarters, this improvement has yet to feed through into Ireland’s headline merchandise trade statistics,” he said.

Looking ahead, Mr McQuaid is forecasting a flat performance for exports in 2013 even allowing for an increase in activity in the latter part of the year, with services up but merchandise down.

“As regards the merchandise trade surplus, we are now projecting a figure of € 38 billion this year, down from € 42.5 billion in 2012.”

Figures on the construction sector were also released today, in the CSO’s Production in Building and Construction Index, which recorded the fifth consecutive quarterly increase in the volume of construction activity. The report also showed that the volume of construction activity had increased by 15.5 per cent since the same period last year and there was also a 1.9 per cent increase between over the third quarter of 2013.

Tom Parlon, CIF director general, said the report is further evidence that the construction sector on a national basis is "officially in recovery".

“This tallies with reports throughout the industry of increased levels of tenders and more on site work taking place. There has been a marked increase in activity and confidence has been consistently improving. The overall numbers point to a growing industry,” he said