JIM POWER: Housing remains a black mark on Irish report card

Housing and health have dominated most of the political and media headlines relating to the economy so far in 2018, writes Jim Power.

This should come as no surprise, given the acute hospital trolley crisis and the housing data, or more precisely the lack of housing data that we can trust as an accurate reflection of what is actually going on in relation to new house building.

It would not take a brave or prescient individual to figure out that these topics will more than likely continue to dominate much of the economic discourse over the duration of 2018.

Neither issue will be solved this year and the most that we can hope for is that some positive progress will be made in tackling what are two very intractable problems.

Whatever chance we have of making positive progress, it will simply not be possible unless the underlying economic performance is strong.

Thankfully it is. In terms of what is going on in the real economy, the news flow has been unambiguously positive so far in January.

The domestic economy benefited enormously from the strong growth performance of the global economy during 2017.

In the first 11 months of the year, the value of merchandise exports was 1.2% ahead of the same period in 2016.

Exports of food and live animals increased by 13.8%; exports of chemicals and related products expanded by 0.6%; but exports of machinery and transport equipment declined by 7%.

Somewhat surprisingly, given the weakness of sterling, overall exports to the UK increased by 9.3%.

It is probably the case that Irish exporters to the UK are using price to maintain competitiveness in the face of very adverse exchange rate movements.

Earlier in the month, Bord Bia published another very strong set of preliminary results for the Irish food and drink sector.

Exports in 2017 expanded by 13% to reach €12.6bn. Dairy products and ingredients accounted for 32% of the total and expanded by 19%.

Ireland truly is in the middle of a global dairy boom at the moment, with butter exports growing particularly strongly at 60% to reach €879m. For a strong dairy nation this is indeed good news.

Export sales to the UK expanded by 7%, but the UK’s market share declined again to 35%. It was over 40% a couple of years ago.

This performance shows that the Irish food and beverage sector is diversifying in the face of Brexit challenges.

However, it just goes to highlight, again, the significance of the UK market to Ireland, and more particularly the fact that it is the easiest external market to penetrate, for Irish food exporters in particular.

All is quiet on the Brexit front at the moment ahead of the beginning of the second stage of negotiations.

It is becoming clearer that sensible souls, and perhaps not so sensible souls, are starting to really realise the magnitude of the mistake that was made back in June 2016.

Perhaps a way will be to found to improve the problem over the coming months and there is a sense that the outlook looks somewhat less bleak now than was the case six months ago. Here’s hoping.

The CSO launched a new labour force survey this week, which replaces the old Quarterly National Household Survey (QNHS).

The new survey apparently is using computer-assisted telephone interviewing, a redesigned questionnaire and other enhancements to the survey methodology.

Either way, the new report shows that the labour market is still performing very strongly.

Employment increased by 48,100 — or 2.2% — in the year to the end of September 2017 and employment in the third quarter stood at 2.21 million.

The overall increase in employment was made up of a very strong increase of 113,900 — or 6.9%, in full-time jobs and a decline of 65,800 — or 12.1%, in part-time jobs.

These changes are really indicative of the strength of the overall labour market and the improving confidence of the business community, with the creation of full-time employment now extremely strong.

A point of note is that the annual growth rate for Dublin employment was just 0.8%.

Perhaps the lack of, and the price of, housing in the capital are starting to act as a serious constraint to growth.


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