Irish Economy trade surplus at a five month high

17 Dec 2018

The latest Goods Exports and Imports data from the CSO, released on Friday, show that the seasonally adjusted trade surplus widened to €4.8bn in October from €3.3bn in the previous month.

This outturn was mainly driven by a 10% m/m rise in exports (to €12.9bn) while imports slipped 5% m/m to €8bn. These data can be volatile on a monthly basis, but unadjusted year to date figures point to very strong growth in trade. In nominal terms, Exports are +14% y/y to €116.4bn; Imports +12% y/y to €73.0bn; and the trade surplus is +18% y/y to €43.4bn. 

Admittedly, the export figure is flattered by a surge in exports of ‘Chemicals & Related Products’ (from €56.4bn to €72.4bn), but six of the nine major commodity groups show increased exports, while seven of the nine main groups show higher imports. In terms of geographic trends, we note that exports to Britain in the opening 10 months of the year were €11.5bn, down from €12.1bn in the same period of last year, although this is mainly driven by a drop in Chemicals exports. ‘Core’ exports such as Food and Beverages are stable on a year-on-year basis. Imports from Britain have climbed to €14.8bn from €14.2bn in the first 10 months of last year, but around half of that headline increase is explained by higher fuel prices. 

Planning permissions soar in Ireland


Planning permissions data released by the CSO on Friday show that 8,018 units were approved in Q318, which represents an annual increase of 69.2%. Some 4,879 (+29.6% y/y) houses and 3,139 (+221.9% y/y) apartments were approved in the quarter. This was the strongest quarter for apartment permissions since Q309 and was helped by some large-scale (by Irish standards) applications in areas such as Sandyford (former Aldi site, 459 apartments); Killiney (81 apartments in a wider scheme); and the North Docklands (325 apartments at Spencer Place). On a rolling four quarter basis, permissions in the 12 months to end-Q318 total 29,495 which is the highest since the period to end-Q110. 

Total Produce: Dole sells Nordic salad business

Total Produce this morning announced that Dole Food has agreed to sell its Nordic salad business Saba to BAMA International for an undisclosed sum. Saba produces washed and ready-to-eat salads from facilities in Sweden and Finland. The sale of this business, which is expected to complete in Q119, was a condition on the EC’s approval of Total Produce’s acquisition of a 45% equity stake in Dole, which completed in July 2018. 

AIB Group: Dr Colin Hunt appointed as CEO


On Friday evening AIB Group announced that the process of selecting a new CEO had concluded, with Colin Hunt chosen to replace the departing Bernard Byrne (subject to regulatory approval). Dr Hunt, who holds a PhD in Economics from Trinity College, is currently the managing director of AIB’s Wholesale and Institutional Banking division, and has been with the group since 2016, having previously managed Macquarie Capital’s Irish operations. He has previously served as a special advisor to both the Minister for Transport and the Minister for Finance in the Irish government, and as a senior economist for both Bank of Ireland Group Treasury and Goodbody Stockbrokers. AIB has said that it has commenced the required regulatory fitness and probity assessment process, as well as consultation with the Minister for Finance in Ireland in respect of the proposed appointment.

US this week

In the US, Wednesday evening heralds the FOMC announcement. We are forecasting a 25bp rise in the Fed funds target range to 2.25%-2.50%, and for technical reasons, a smaller 20bp hike in the IOER rate to 2.40%. Bearing in mind recent market volatility, the yield curve is now factoring in the chances of a hike below 80%. The FOMC’s accompanying statement, Fed Chair Powell’s press conference and the ‘dot plot’ will steer markets towards its intentions for 2019. In addition to data such as the Philly Fed index and second revisions to GDP, we note that the subject of a partial government shutdown on Friday 21st is on the horizon again, thanks to an ongoing standoff between President Trump and congressional Democrats over ‘border security’ (i.e. the US/Mexico wall).

UK this week

If there is an end-of-term feeling in UK-space, many of us will have missed it. Brexit of course remains centre stage. After the drama last week of the PM pulling the ‘meaningful vote’ in the Commons and then surviving a vote of confidence from her parliamentary party, we do not seem to have advanced much further. Indeed we have very few lines of sight on the Brexit process looking forward. Datawise, the MPC announces its policy decision on Thursday. The Bank rate looks set to remain at 0.75% but we will see if the committee’s analysis of the impact of the Budget, plus recent data showing rising pay growth, support our February hike call. We will also check to see how current Brexit uncertainties weigh on the BoE’s judgements. A number of key UK statistics are due as well, as the ONS clears its decks ahead of the Christmas period. These include the CPI, retail sales, Q3 national accounts and the public.

Europe this week


Euro area wise, markets will be assessing a likely response to the Italian government’s compromise to aim for a Budget deficit of 2.04% (two point zero four percent) of GDP in 2019. While we do not expect the tensions between the two to disappear completely, signs of a détente have resulted in a rally in Italian BTPs, and with it easing concerns about the capital position of Italian banks. In terms of key data, the week sees final HICP inflation and the German IFO survey.

Brexit- which way now? 

The direction of the Brexit process is taking a fresh turn into opaqueness. Theresa May’s favoured strategy is that the UK should continue to negotiate with Brussels over the next few weeks and hold the ‘meaningful vote’ in parliament on 14 January. However eight cabinet ministers are demanding that that the Commons takes a series of indicative votes on various ways forward to gauge which options might secure a Commons majority. There have also been further rumblings over a second referendum as a way of breaking the deadlock, and on the other side, a couple of cabinet members apparently favour a ‘managed’ no deal. The PM is back in the Commons today at which she is expected to say that a second referendum will cause ‘irreparable damage to the integrity of our politics’.

Today’s Economic Calendar 


10.00 EZ CPI
11.00 UK CBI Industrial Trends Orders