Trade surplus bucks losing trend

Ireland’s monthly seasonally-adjusted trade surplus rose by nearly 8% in February, bucking a trend of two successive monthly declines.

However, the same month saw a 10% annualised fall in export value.

Preliminary CSO figures published yesterday showed that a 2.2% monthly rise in exports and a 2% fall in imports boosted the trade surplus for February to just under €3.13bn — nearly 8% up on the €2.9bn figure recorded in January.

January marked the first time the surplus slipped below the €3bn mark since September. On a monthly basis, February saw a €154m rise in export value to just over €7bn, with import value falling by €69m to nearly €3.9bn.

However, the latest CSO trade data shows a year-on-year fall of €753m — 10% — in February’s exports to €6.65bn; the main drivers being a 15% dip in medical and pharmaceutical product exports and an 18% drop in organic chemical exports.

“In all, this is a weak start to the year, albeit one that is not unexpected, given the trends evident in the second half of 2012,” said Philip O’Sullivan, chief economist with NCB Stockbrokers.

“The decline in chemicals exports is not a new phenomenon, while we recently pulled back our export growth forecast for 2013. We will monitor trade data over the coming months to see if it warrants a further adjustment to our forecasts.”

NCB currently expects Irish exports to grow by 3% this year, with GDP growth amounting to 1.2%.

“The impact of the pharmaceutical patent cliff remains uncertain,” said Davy Stockbrokers’ David McNamara. “Production volumes in pharmaceuticals rose sharply in February, but this has yet to be borne out in the trade data. The fall in exports values suggests that patent expirations may well be impacting on prices, but production volumes remain robust in the sector. We expect overall exports to grow by 2% in 2013 and 3.4% in 2014, driven mainly by a strong services sector.”

Alan McQuaid of Merrion Stockbrokers tentatively forecast a volume rise of 4% in goods and services this year, with services exports again likely to be the key growth engine.

However, he added that the risks are weighted towards the downside, “especially as the sluggish external demand conditions, which acted as a drag on the performance of merchandise exports last year, are likely to persist in 2013”.

In terms of imports — which also fell by 2% on a year-on-year basis in February — two thirds of value came from other EU nations, with a third coming from Britain. Yesterday’s data showed that the US accounted for 9% of Irish imports during the latest recorded month.