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MONTHLY ECONOMIC BULLETIN 5 November 2018 · PDF file investment (-32.0 per cent) and imports (-6.0 per cent) declined significantly due to a fall in the onshoring of intellectual

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  • MONTHLY ECONOMIC BULLETIN

    5 November 2018

  • Department of Finance | Monthly Economic Bulletin: October 2018

    | 1

    The Department’s Monthly Economic Bulletin (MEB) provides a monthly update of some of the key developments within the Irish economy across a broad spectrum of sectors. The bulletin also outlines fiscal developments for the State, as well as being a source of the Department’s most up-to-date forecasts and providing a snapshot of conditions in some of Ireland’s key trading partners. The publication is designed with the aim of being both informative and accessible to a wide readership. The MEB can be used as a research aid or for presentational purposes and is also available online at the Department’s website at www.finance.gov.ie

    Table of Contents The Economy ................................................................................................................................................................ 2

    Economic Growth ..................................................................................................................................................... 2

    International Developments ..................................................................................................................................... 3

    External Trade ........................................................................................................................................................... 4

    Personal Consumption ............................................................................................................................................. 5

    Inflation..................................................................................................................................................................... 5

    Labour Market .............................................................................................................................................................. 6

    Employment ............................................................................................................................................................. 6

    Earnings .................................................................................................................................................................... 7

    Sectoral Developments ................................................................................................................................................. 8

    Housing ..................................................................................................................................................................... 8

    Tourism ..................................................................................................................................................................... 8

    Public Finances ............................................................................................................................................................. 9

    Exchequer Balance.................................................................................................................................................... 9

    General Government Balance .................................................................................................................................. 9

    Other News ................................................................................................................................................................. 10

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

  • Department of Finance | Monthly Economic Bulletin: October 2018

    | 2

    The Economy Economic Growth Macroeconomic outturn for 2017

     Real GDP rose by 7.2 per cent in 2017. GNP rose by 4.4 per cent.

     GNI* is estimated at €181.2 billion in 2017 (GDP is €294.1 billion). As a result, the debt to GNI* ratio was 111.1 per cent in 2017 (compared to a debt to GDP ratio of 68.4 per cent in 2017).

     Modified Final Domestic Demand– that is domestic demand excluding the volatile components of investment spending - made a solid positive contribution to growth in 2017 increasing by 3.2 per cent on an annual basis.

     Net exports were the main driver of growth in 2017, reflecting a significant increase in exports of 7.8 per cent and a substantial decline in imports of 9.4 per cent over the year. The latter is primarily due to a contraction in imports linked to the onshoring of intellectual property assets.

    Macroeconomic outturn for Q2 2018

     In the second quarter of this year, the level of GDP rose by 2.5 per cent relative to the previous quarter (on a seasonally adjusted basis). As a result, the level of GDP was 9.0 per cent higher year-on-year.

     Personal consumption (+4.4 per cent) and exports (+11.3 per cent) recorded strong annual growth while investment (-32.0 per cent) and imports (-6.0 per cent) declined significantly due to a fall in the onshoring of intellectual property.

    (year-on-year % changes) 2016 2017 2018

    Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017

    Personal Consumption 2.9 3.1 -0.3 1.0 3.1 2.8 2.9 4.4 4.0 1.6 Government Consumption

    4.7 3.4 3.3 3.5 4.1 4.9 3.6 4.2 3.5 3.9

    Gross Investment 58.8 31.6 -22.4 -8.7 -46.0 -43.0 -1.0 -32.0 51.7 -31.0

    Exports 2.0 2.7 3.0 4.4 8.6 14.5 6.2 11.3 4.4 7.8 Imports 16.7 7.9 -9.3 -3.1 -14.7 -10.5 -1.4 -6.0 18.5 -9.4 GDP 1.4 12.7 2.9 6.2 13.2 6.5 9.3 9.0 5.0 7.2 GNP 8.5 21.1 -1.1 0.0 16.0 3.0 9.1 11.9 11.5 4.4

    Source CSO

    Latest Economic Forecasts

     The Department of Finance published its most recent macroeconomic forecasts on Oct 9th as part of Budget 2019. These forecasts along with those of other forecasting institutions are outlined in the table to the right.

    GDP Forecasts Date 2018 2019

    European Commission July 2018 5.6 4.0

    Department of Finance Oct 2018 7.5 4.2

    Central Bank of Ireland Oct 2018 6.7 4.8

    IMF Oct 2018 4.7 4.0

    ESRI Sept 2018 8.9 4.5 OECD Sept 2018 4.0 2.9

  • Department of Finance | Monthly Economic Bulletin: October 2018

    | 3

    International Developments

    The United States

     The US economy expanded by 0.9% in Q3 2018 q-o-q and increased by 3.5% y-o-y.

     Annual inflation was 2.3% in September, down from 2.7% in August. Core inflation was up 0.1% on the month

    (sa) and up 2.2% y-o-y.

     US non-farm payroll data showed the US economy gaining 250,000 jobs in the month of October (sa), with the

    unemployment rate unchanged at 3.7% in October.

     The manufacturing PMI increased to 55.7 in October and the services PMI increased to 54.7 in October (above

    50 indicates expansion).

    The euro area

     The euro area economy expanded by 0.2% in Q3 2018 q-o-q and increased by 1.7% y-o-y (sa).

     Annual inflation in the euro area decreased increased from 2.1% in September to 2.2% in October. Core

    inflation was 1.3% in October, up from 1.1% in September.

     The unemployment rate in the euro area was 8.1% in September (sa), unchanged from August, and down from

    8.9% rate recorded in September 2017.

     The manufacturing PMI decreased to 52.0 in October and the services PMI decreased to 53.3 in October (above

    50 indicates expansion).

    Exchange Rate Developments

     The €/£ spot rate was 0.88 in October, down from 0.89 in Sep, and down from 0.89 October 2017. The €/$

    spot rate was 1.15 in October, down from 1.17 in September, and down from 1.18 in October 2017.

     Brent crude oil was $80.5 in October, up from $79.1 in September and from $57.6 a year earlier.

    .

    The United Kingdom

     The UK economy expanded by 0.7% in the three months to

    August.

     Annual HICP inflation was 2.4% in September 2018, down from

    2.7% in August 2018. Core inflation was 2.0% in September, down

    from 2.2% in August.

     Employment was unchanged in the 3 month period to August

    2018 compared with March to May 2018 but increased by 289,000

    y-o-y.

     The unemployment rate was 4.0% in the three month period June

    to August, down from 4.3% in the same period last year.

     The manufacturing PMI decreased to 51.1 in October and the

    services PMI decreased to 52.2 in October.

  • Department of Finance | Monthly Economic Bulletin: October 2018

    | 4

    External Trade External Trade and Industrial Production

     On a monthly basis, merchandise exports decreased by 3.1% (sa) in value terms in August. Merchandise imports decreased by 1.8% (sa) in value terms. As a result, the trade surplus decreased by 5.8% to €3,696 million compared with July 2018.

     On a monthly basis, industrial output increased by 7.9% (sa) in August m-o-m and increased by 13.3% y-o-y.

     Output in the modern sector increased by 1.4% in August and output in the traditional sector increased by 2.2% in the month.

    PMI Data1

     The Manufacturing PMI had a reading of 54.9 in

    October, down from the previous month’s 56.3

    (above 50 indicates an expansion). The rate of

    expansion in the Services PMI increased to 58.7 in

    September, from 58.0 in August.

    Balance of Payments – Current Account

     In Q2 2018, a current account surplus of 13.3 per

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