Trade surplus increases by €1bn

Ireland’s seasonally adjusted trade surplus jumped by 27%, or €1bn, in August to nearly €5bn, on the back of a record monthly export performance.

New CSO figures show the value of Irish exports in August amounted to just over €9.1bn — an 18% improvement on Aug 2011, and a 16% rise on July.

This helped boost the surplus to just over €4.9bn. The last time that figure was over the €4bn mark was Nov 2011.

Richard Bruton, the enterprise minister, said yesterday: “Conditions in international markets remain difficult, but [these] record figures show that Irish exporters are performing extraordinarily well in a tough environment. The challenge now is to build on these strengths.”

August’s export performance was driven by the chemical, medical, and pharmaceutical sectors, something not missed by Chambers Ireland, whose deputy CEO, Seán Murphy, further highlighted the importance of foreign direct investment to the Irish economy.

“It is vital that, with the announcement of Budget 2013 fast approaching, the Government ensures that the cost of doing business in Ireland remains competitive,” he said.

Analyst reaction was broadly positive. “While the monthly index is quite volatile and some of the gains seen in August may be reversed in September, the outlook for the third quarter is encouraging,” said David McNamara of Davy Stockbrokers.

“While the monthly trade data are not a wholly reliable guide of the contribution of goods exports to GDP growth, the strong growth in monthly volumes suggests the weak performance in the second quarter of the year was temporary”.

Merrion Stockbroker’s Alan McQuaid described the performance as “very encouraging”, but also noted concern over the sustainability of the positive contribution from the chemicals sector. He also noted momentum could be lost in the area of merchandise exports this year.

“Nevertheless, we believe that, as was the case during the 2009 collapse in global trade flows, the sectoral composition of external demand will shift in favour of goods which Ireland specialises in, especially the likes of pharmaceuticals. On top of that, overall export activity looks set to be supported by ongoing competitiveness gains and a very healthy services sector.”

He said that overall Irish export growth is set to be weaker this year than last, with volumes up by 4.5% rather than the 5.1% growth seen in 2011.

However, he anticipates stronger respective growth levels of 5% and 5.6% for the next two years.