17 Dec 2019

Irish Economy: New goods exports record in October

Monthly goods exports exceeded €14bn on a seasonally-adjusted basis for the first time in October according to the latest trade data from the CSO.

These latest data underscore the significant growth in the Irish export sector over recent years, and the last two years in particular. Indeed, monthly goods export totals had not reached €13bn before this year and, in the first 10 months of 2019, have been above €13bn in four months and now above €14bn in October. Looking at the components of the exceptional performance in October, seven of the nine major commodity groups increased exports y/y but the greatest year-on-year increase was in the Chemicals and Related Products group (i.e. the pharma industry). This sector accounted for 62% of all goods exports in the first ten months and is a multiple of the size of the next largest sector, the Machinery and Transport Equipment group. Looking at the destinations of the country’s trade flow, exports to Britain were -1.7% YTD but, given the strong growth elsewhere, accounted for just 8.9% of total exports YTD. Goods exports to the EU (ex. GB) were +6.4% YTD and were +18.9% to the USA in the same period, although much of this growth has been from the pharma sector.


Goods imports of €7.9bn in October were a little higher than the average in both the YTD and in 2018, but not to the same extent as the increase in exports. Over the first ten months, goods imports were -3.2% y/y with, interestingly, imports of chemicals responsible for the entire decline. Given these dynamics, the YTD trade surplus in already 15% higher than last year.


Johnson goes hard, again


Late last night UK PM, Boris Johnson, insisted that there would be no extension to the 11 month transition period once the UK leaves the EU at the end of January next year and indicated that this would be enshrined in law via the Withdrawal Agreement Bill. This raises the risk that the UK leaves the transition period without a free trade agreement at the end of 2020. This hardline approach resulted in sterling selling-off sharply just after the NY close. The introduction of, and a vote on the second reading of, the ‘WAB’ is expected to take place this Friday. 


There was also the start of a mini Cabinet reshuffle last night with outgoing Culture Secretary Nicky Morgan being replaced by Nicky Morgan, who keeps her position by virtue of her elevation to the Lords, having resigned as an MP before the election. A more comprehensive shake up of senior positions is expected to take place early in the New Year alongside a major restructuring of government departments.


Impeachment vote due on Wednesday


A full House of Representatives vote to officially impeach President Trump is expected to take place on Wednesday, following the approval of two articles of impeachment against him last week. The House floor debate is likely to take most of Wednesday with the House then taking two votes, one for each article of impeachment (abuse of power and obstruction of Congress). It looks likely that the Democrat controlled House will vote to impeach Mr Trump in what is likely to be a largely party line vote; a simple majority is required, so 216 of the current 431 members. 


Mr Trump still remains President at this point, awaiting a Senate trial. The shape of any Senate trial that would follow remains an open question. At this stage, the most likely outcome is that the Republican controlled Senate would not impeach the President, with such a conviction requiring 2/3 of the 100 seat Senate to back it. The Trump administration’s tactics suggest they will seek to take every step they can to expedite any Senate trial, such as by minimising the number of witnesses called. Once the House debate and vote is concluded, we will hear more on the time, shape and broader logistics of the subsequent Senate trial.


Economic Releases


UK 09.30 Unemployment 

US 14.15 Industrial Production