International Trade

16 Aug 2019

Irish Economy: Goods exports +10% in H1

Exports of goods from Ireland increased by 10% y/y in the first half of the year according to the latest data from the CSO.

Imports of goods were only modestly higher in H1 (+2% y/y) so the trade surplus grew by 23% to €33.8bn. On a seasonally-adjusted basis, June’s export total of €11.5bn was a relatively low sum, but this follows three months out of the last six where goods exports have breached €13bn for the first time. This strong growth in exports has pushed the average seasonally-adjusted trade surplus to €5.5bn in the year to date, which compares very favourably with the average surplus of €4.1bn last year.

Exports increased in seven out of nine commodity groups in the first half of the year, including the three largest – Chemicals, Food & Animals and Machinery & Transport Equipment. Encouragingly, exports to Great Britain were 6.8% higher y/y in H1 with the most significant increase seen in the Mineral fuels, lubricants and related materials category. Exports to the EU (ex. GB) increased by 9.3% y/y in the first half, and we note, in the context of the Brexit shadow, that the value of exports to the EU (ex. GB) were more than four times that of exports to GB in the period.

Corbyn’s proposals gain traction

Liberal Democrat leader Jo Swinson (yesterday evening) softened her initial opposition to Jeremy Corbyn’s proposal for a ‘time-limited’ government by requesting a meeting with the Labour leader to discuss how the two parties can work together to stop a no-deal Brexit. Further support for the proposals has come from Europhile Conservative MPs Dominic Grieve, Oliver Letwin, Caroline Spelman and Guto Bebb - as well as former Tory Nick Boles – who have all indicated their willingness to meet with Mr Corbyn. Signs of potential cross-party cooperation has served to increase the probability of success of a vote of no-confidence. Particularly if (as reports suggests) Philip Lee joins his former colleague Sarah Wollaston in defecting to the Liberal Democrats, which would eliminate the government’s precarious majority of one. 

Obstacles ahead

We would note that the obstacles to a Corbyn-led temporary government remain high given that several Labour and independent MPs may well abstain or support the incumbent government in the event of a no-confidence motion. For instance, former Labour (and now independent) MP Ian Austin wants to keep Mr Corbyn out of Number 10 for reasons of national security, whereas Eurosceptic Labour MPs such as Kate Hoey would like to see Brexit delivered. Nevertheless, even if Mr Corbyn could muster enough support to topple Boris Johnson’s government after the summer recess, he is then likely to face opposition to becoming Prime Minister from at least 11 MPs: Change UK, the Independents and non-aligned independent MP Lady Sylvia Hermon. 

Sterling has seen some modest gains over the last 24 hours over signs that Mr Corbyn’s proposals are gaining traction with the benchmark EUR/GBP rate trading in/around the £0.9150 as Europe opens this morning.

UK retail sales surprise on the upside

July figures, released yesterday, held up better than expected with sales volumes rising by 0.2% on the month, whilst consensus expectations and our own forecast were for a drop of 0.2% m/m. On a year-over-year basis, that left sales 3.3% up, down from June’s 3.8%, but still a respectable growth pace. In terms of recent dynamics, on a 3m/3m basis sales were 0.5% higher, suggestive of the UK consumer backdrop remaining a supportive factor for broader economic momentum. Note that online sales continue to be primary driver of the relative solidity of the numbers, with non-store sales/repair 21.3% up on year ago levels. Sterling has reacted very little to the numbers, focused primarily on Brexit still.


Market Orders – Take advantage of volatility 

EUR/GBP remains below 0.92 & cable above 1.21 level this morning, with Jeremy Corbyn proposal for a ‘time limited’ government beginning to gather momentum. With markets hyper sensitive to any Brexit related news, orders are an excellent tool to take advantage of volatility. 

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