The publication, by the CSO, of National Accounts and Balance of Payments data for the second quarter of the year did not attract the same degree of public commentary as usual.
These are key figures showing how the Irish economy performed and its interactions with the rest of the world.
The data have become discredited, though, as the figures for 2015 were greatly inflated by corporate restructuring and balance sheet changes by some multinational companies. As a result, GDP and GNP no longer represent an accurate measure of the value to goods and services produced in Ireland.
The small and open nature of the Irish economy and complex and varied nature of the operations of many of the companies that are based here, makes it increasingly difficult for single headline indicators - like GDP or GNP - to accurately represent economic activity in Ireland, as the CSO itself has acknowledged.
Instead, one needs to look at a broad range of indicators to provide the best gauge on how the economy is performing. In this regard, the National Accounts data still provide lots of useful information on the economy.
For a start, the CSO estimate that GDP grew by 4% year-on-year in the first half of 2016 looks broadly correct and is consistent with other data on the economy. However, it represents a slowdown in the underlying growth rate of the economy compared to 2015 and 2016.
The National Accounts data reveal quite a slowdown in the rate of growth in core domestic demand this year. Growth in core domestic spending – consumer and government spending plus investment – slowed to around 2.5% in the first half of 2016 from an average 5.5% in the past couple of years. Business investment, in particular, has fallen back somewhat this year, after surging ahead in 2014 and 2015.
Meanwhile, consumer spending has not sustained the strong growth rate of 4.5% seen last year.
This is evident from other indicators also. Indirect tax receipts are running behind schedule, while after a strong start to the year, new car sales have lost some of their upward momentum. Meantime, there has been a marked deceleration in growth in retail spending since the spring.
The CSO has indicated that a fall-off in spending abroad by Irish tourists also contributed to a slowdown in consumer spending in the second quarter of the year. Thus, a broad range of indicators suggest that consumer spending has lost momentum since the earlier part of the year.
Meanwhile, on the external front, CSO data suggest that growth in service exports has slowed. Furthermore, the PMI for the manufacturing sector has fallen to its lowest levels in more than three years in the past couple of months.
However, we should be careful not to overstate the extent of the slowdown in the economy. Many indicators are still pointing to a strong performance and, as already indicated, GDP did grow by 4% year-on-year in the first half of the year.
The PMI for the key services sector remains close to a ten-year high and is pointing to ongoing robust growth in activity. The recovery in construction is continuing, albeit from a low base, with house building in particular remaining on a strong upward trajectory. Consumer confidence is close to fifteen-year highs.
Labour market data also remain strong, with employment growth being sustained at over 2.5% year-on-year in the first half of 2016, while the downtrend in the Live Register is still firmly in place.
In summary, then, the economy seems to be performing reasonably well in 2016, but growth has lost some momentum and will be lower than in the last two years.
Oliver Mangan is chief economist at AIB.
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