Trade surplus third highest in EU as lowest labour cost rise helps boost competitiveness
Tuesday, September 18, 2012
Ireland had the third highest trade surplus among the 27 EU member states in July and the lowest increase in hourly labour costs across the region, according to official figures released yesterday.
The country’s trade surplus was €20.9bn, which was behind Germany at €92.4bn and the Netherlands at €25.6bn.
The UK, in contrast, had the biggest fiscal deficit at €73.8bn.
Overall, the eurozone recorded a €15.6bn trade surplus with the rest of the world in July, which was a significant improvement on the €2.1bn surplus registered in Jul 2011.
The June trade surplus was €13.6bn compared with €0.2bn a year earlier. However, seasonally adjusted exports fell by 2% in July compared with a month earlier, while imports were down 1.2% for the same period.
For the 27-member state EU, the trade balance was €3.1bn in July, which compared favourably with a €10.9bn deficit in Jul 2011.
There was an 18% increase in exports from the EU to Russia and South Korea over the month. There was also a big increase in the flow of goods to Japan and Brazil.
The trade surplus with the US went from €34bn in the Jan -Jun 2011 period to €40.6bn in the Jan-Jun period 2012. Moreover, the EU trade deficit with China fell from €75bn to €67.5bn over the same period.
Ireland saw an increase of just 0.4% in hourly labour costs over the second quarter of the year — making it the lowest recorded across the EU. Spain and the Netherlands were the next lowest on a 0.5% increase. Romania had the highest at 7.1% followed by Finland on 4.9% and then Bulgaria and Latvia on 4.8%.
Ireland’s competitiveness was eroded during the decade leading up to 2008 through a surge in hourly labour costs.
Overall, labour costs increased by 1.6% over the second quarter of the year, compared with a 1.5% increase over the first quarter of the year.
The two main components of labour costs are wages and salaries and non-wage costs.