ECONOMIC GROWTH (VOLUME)

According to Central Statistics Office data, the y-o-y increase in GDP at constant (1995) market prices in 2003 was 3.7% while the corresponding increase in GNP was 2.8%. The following table shows growth in GDP and GNP in constant (1995) prices and the corresponding annual values in current market prices.

	GDP (%)	Value (€m)	GNP (%)	Value (€m)
1997-2003 (avg.)	7.6	-	5.8	-
1998	8.9	77,581	7.9	68,030
1999	11.1	89,457	8.7	76,359
2000	9.9	103,065	10.1	88,155
2001	6.0	115,433	3.8	97,107
2002	6.1	127,992	1.5	104,474
2003	3.7	134,786	2.8	111,671

These figures represent the average of the expenditure and output estimate of GDP and GNP respectively.

Latest estimates of economic growth from the CSO relate to the first quarter of 2004. These preliminary figures indicate that GDP increased by 6.1% year-on-year in Q1 2004, while GNP increased by 5.1% over the same period.

BUDGET INDICATORS

Exchequer Balance

The 2003 Exchequer Balance showed a deficit of €980 million, which compares with the Budget 2003 target of a deficit of €1,869 million. In 2002 there was an Exchequer Surplus of €95 million. A deficit of €2,806 million is forecast for 2004. This forecast will be updated in the Economic Review and Outlook due to be published later this month.

General Government Balance

The estimated outturn for the General Government Balance (GGB) in 2002 is a deficit of 0.2% of GDP on an ESA 95 basis. The 2003 estimated outturn for the GGB is a surplus of 0.2% of GDP, while a deficit of 1.1% is forecast for 2004.

General Government Receipts and Expenditure*

	2002	2003 (Provisional)	2004 (Projected)
	€m	€m	€m
GG Receipts	42,502	45,935	48,212
GG Expenditure	42,759	45,654	49,851
GG Balance	-258	280	-1640
- as a % of GDP	-0.2	0.2	-1.1
Financing of GG Balance:
Currency and Deposits	-81	240
Securities other than Shares (excl. derivatives)	413	1642
Short-term	-1,171	-2,999
Long-term	1,583	4,641
Loans	-2	-451
Short-term	-34	-136
Long-term	32	-316
Other Movements	-587	-1,151
Total	-258	280	-1,640

* rounding may affect totals

These projections will be updated in the Excessive Deficit Report which will be submitted to the EU Commission in September 2004 under the requirements of the Maastricht Treaty.

An advance release calendar for central and general government - one quarter in advance - is available on the IMF Dissemination Standard Bulletin Board (details below).

General Government Debt

Ireland’s General Government Debt to GDP ratio was 32.3% at end-2002.  The outturn at end-2003 is estimated to be 32.8% and the forecast for end-2004 is 32.2%.

BALANCE OF PAYMENTS – CURRENT ACCOUNT

	Q1	Q2	Q3	Q4	Total
1999	€63m	-€6m	-€31m	€199m	€226m
2000	-€432m	€505m	-€238m	-€214m	-€379m
2001	-€508m	-€26m	€126m	-€349m	-€757m
2002	-€963m	-€1,135m	€95m	€386m	-€1,617m
2003	-€834m	-€413m	-€190m	-€459m	-€1,896m
2004	-€685m

There was a deficit of €685 million on the current account of the Balance of Payments in the first quarter of 2004. This compares with a deficit of €834 million in Q1 2003. The deficit in Q1 2004 was due to debit balances under the Services heading and the Income heading, as well as Current Transfers, which more than offset the credit balance under the Merchandise Trade heading. The current account deficit for the year 2003 was €1,896m compared to a deficit of €1,617m for 2002.

EMPLOYMENT

Labour Force Survey / Quarterly National Household Survey

The latest Quarterly National Household Survey (June 2004) indicates that in the twelve months to the quarter December to February 2004:

- Employment increased by 52,300 or 2.9%;

- Unemployment decreased by 1,600; the seasonally adjusted unemployment rate fell to 4.4% (4.4% non-seasonally adjusted);

- The labour force increased by 50,800 or 2.7%;

- The number of long term unemployed increased over the year by 3,800 – the long term unemployment rate stood at 1.6% in the quarter December to February;

- The seasonally adjusted participation rate was 60.6% in Q1 2004, up from 60.5% in Q4 2003 and 60.1% in Q1 2003 (i.e. quarter on quarter and year on year comparison).

Live Register

The Live Register figure for June 2004 was 168,952. This is an increase of 6,980 on the figure for May 2004 and a decrease of 8,900 on the figure for June 2003. The underlying seasonally adjusted figure in June 2004 was 167,000, which represents a decrease of 1,000 on the figure for May 2004 and a decrease of 9,000 on the seasonally adjusted figure for June 2003.

Building and Construction Employment

Figures in the QNHS indicate that employment in construction rose by 13,500 or 7.2% in the 12 months to the quarter December to February 2004. The CSO’s index of Employment in Construction release indicates that construction employment increased by 1.4% year on year to May 2004.

Other Production

The latest QNHS indicates that employment in production (other than construction) decreased by 8,400 or 2.7% in the twelve months to the quarter December to February 2004. The CSO release on Industrial Employment (March 2004) indicates that industrial employment decreased by 11,000 (4.3%) in the twelve months to December 2003.

Banking, Insurance and Building Societies

Figures in the QNHS indicate that employment in “financial and other business services” increased by 8,300, or 3.7% in the 12 months to the quarter December to February 2004.The latest CSO release Banking, Insurance and Building Societies: Employment and Earnings indicates that employment in banking, insurance and building societies increased by 2,300 (4.5%) in the twelve months to March 2004.

Public Sector employment

Figures released in the QNHS indicate that employment in public administration and defence decreased by 300 or 0.3% in the 12 months to the quarter December to February 2004, and employment in education and health increased by 12,900 or 4.5% over the same period. The latest CSO Statistical Release on Public Sector Employment and Average Earnings indicates that 241,200 were employed in the public sector (excluding health), an increase of 1,100 (0.4%) in the year to December 2003.

Notified redundancies

The latest figures from the Department of Enterprise, Trade and Employment show that the number of notified redundancies in the first 6 months of 2004 was 12,853 – the comparable figure in Jan-Jun 2003 was 12,846. There were 1,848 notified redundancies in June 2004, a decrease of 31.6% on the corresponding fi gure for June 2003.

FÁS Training and Employment Programmes

At end June 2004, there were 25,837 people in FÁS Employment Schemes (incl. 20,172 on Community Employment). There were a further 10,457 on training programmes/schemes for the unemployed and jobseekers. The corresponding figures for those in FÁS Employment Schemes for June 2003 was 28,256 (incl. 22,157 on Community Employment) and 12,573 were attending the various other training programmes/schemes. 

EARNINGS

Industrial Earnings

The latest CSO release shows that average weekly industrial earnings in the year to December 2003 increased by 6.9%, reflecting an increase of 5.3% in the hourly rate and an increase of 1.5% in the number of hours worked. Average weekly industrial earnings in December 2003 were €558.69.

The corresponding average increases for the manufacturing sector were 6.1% (weekly), 4.8% (hourly) and a 1.3% increase in hours worked, with weekly earnings of €533.26.

The earnings of all employees in the industrial sector rose by 5.9% to €647.11 in the year to December 2003. As well as the aforementioned 6.9% increase for Industrial workers, there was a 4.3% increase for Clerical & Managerial employees.

Construction

According to the latest CSO release, average weekly earnings for all workers in the construction sector increased by 4.3% to €685.72 in the year to March 2004 - the hourly rate increased by 5.4% while the number of hours worked fell by 1.1%. In the same period, average weekly earnings of skilled operatives increased by 3.5% to €795.48, while for unskilled/semi-skilled workers there was a 4.6% increase to €666.71.

Banking, Insurance and Building Societies

The CSO Statistical Release, Banking, Insurance and Building Societies: Employment and Earnings, indicates that average weekly earnings in the financial sector increased by 6.3% to €727.23 in the year to March 2004.

Public Sector

The latest CSO figures show that average weekly earnings in the public sector (excluding health) increased by 3.5% to €743.53 in the year to December 2003.

Distribution and Business Services

The latest CSO release indicates that average weekly earnings in the Distribution and Business Services sector increased by 4.6% to €608.69 in the year to March 2004. Average weekly earnings in the Distribution sector increased by 3.5% to €612.81 while those in the Business Services sector increased by 5.1% over the same period to €606.35.

INFLATION AND INTEREST RATES

Inflation

The latest CSO figures show that the rate of inflation, as measured by the Consumer Price Index (CPI) increased to 2.3% in June from 1.7% in May. This increase was mainly due to the increase in oil prices. Excluding mortgage interest rates, the underlying CPI was 1.8%. The CPI excluding tobacco was 1.5%. In December 2003, the Department forecast an annual average CPI rate of inflation of 2.5% in 2004. This will be updated with the publication of the Economic Review and Outlook in August.

As measured by the EU Harmonised Index of Consumer Prices (HICP), Ireland’s annual inflation rate was 2.5% in June, up from 2.1% in May. Euro area inflation in June was 2.4%, compared to 2.5% in May.

Manufacturing Output Prices

In June 2004, manufacturing output prices increased by 1.3% y-o-y. The prices for home sales increased by 2.0% y-o-y, while export sales prices grew by 1.2% y-o-y.

Interest Rates

The EURIBOR one-month interbank rate on 30 July 2004 was 2.08%, up from 2.07% at the end of June, while the EURIBOR three-month interbank interest rate at 30 July 2004 was 2.12%, unchanged from 2.12% at end of June.

Ten-year Irish Government bonds (04/2013) traded at the close of 30 July 2004 at a yield of 4.13% compared to 4.21% for its equivalent German Government bond (the slightly longer term 07/2014). The European Central Bank’s Repo rate at end of July was 2.00%.

House Prices

Department of the Environment, Heritage and Local Government figures show that the average price of new houses nationwide in 2003 rose by 13.4% to €224,567 while the average price of second-hand houses rose by 16.3% to €264,898. In Dublin, average new house prices rose by 13.9% to €291,646 while average second-hand house prices rose by 19.5% to €355,451.

In the first quarter of 2004, average new house prices nationwide rose by 11.3% y-o-y to €238,084 while average second-hand house prices rose by 12.6% to €274,274. In the same period, average new house prices in Dublin increased by 11.8% y-o-y to €311,813 while average second-hand house prices in Dublin increased by 12.3% to €362,845.

PERSONAL CONSUMPTION

Retail Sales

In the month of May 2004, the volume of retail sales increased by 5.4% y-o-y; if Motor Trades are excluded the increase was 4.8%. For the January-May 2004 period the y-o-y increase was 3.0% for All Businesses and 2.5% for All Businesses excluding Motor Trades. The annual increase in Retail Sales volume in 2003 as a whole was 0.9% while the corresponding increase excluding Motor Trades was 1.6%. The volume increase in sales in 2002 was 0.1%, while sales excluding Motor Trades increased by 1.6%.

Car Registrations

Data from the Revenue Commissioners indicates that new car registrations in June 2004 were up by 19.1% on the same month in 2003. Meanwhile, registrations of imported used cars were up 49.5% y-o-y in June 2004. Cumulative registrations of new cars in January-June were up 8.9% year-on-year, while the increase for imported used cars was 51.3%.

OUTPUT AND EXPORTS

Manufacturing Output

Manufacturing output volume increased by 6.0% y-o-y in April 2004 and was 5.3% higher y-o-y for the 3-month period February-May 2004. The CSO provisionally estimates that output grew by 1.1% y-o-y in May 2004 and by 4.7% y-o-y for the 3-month period March-May 2004. According to CSO data, manufacturing output volume grew by 6.4% in 2003, following an 8.4% increase in 2002.

Exports

Comparing the volume of exports in January-March 2004 with that in January-March 2003 reveals an increase of 12%. First estimates from the CSO indicate that the value of exports in the month of May 2004 decreased by 3% y-o-y. In January-April 2004 exports were 5.2% higher in value terms than in the corresponding period in 2003 and in the same period:

·        Exports of Food and live animals increased by 3.5%

·        Exports of Chemicals increased by 10%

·        Exports of Medical and pharmaceutical products increased by 10%

·        Exports of Computer equipment decreased by 8.6%

·        Exports to the UK decreased by 5%

·        Exports to the US increased by 2%

·        Exports to the EU increased by 14%

TOURISM

According to CSO figures, there were 6,369,000 overseas visits toIreland in 2003, an increase of 5% over 2002. The number of visits abroad by Irish residents was 4,929,000 in 2003, an increase of 6.4% on 2002. Earnings from overseas visitors to Ireland in 2003 amounted to €3,876 million, an increase of 2.9% over 2002. Expenditure by Irish visitors abroad amounted to €4,163 million in 2003, an increase of 5.3% over 2002.

In the first quarter of 2004, there were 1,212,000 overseas visitors to Ireland, compared with 1,118,000 in the same period in 2003, an increase of 8.4%. The number of visits abroad by Irish residents in Q1 2004 was 1,039,000, an increase of 10.6% when compared with the first quarter of 2003.

AGRICULTURE

Output

The CSO release Output, Input and Income in Agriculture 2003 - Final Estimate indicates that agricultural output at basic prices increased by 3.1% in 2003. This follows a decrease of 3.8% in 2002.

Farm Incomes

The same CSO release shows that aggregate farm incomes (i.e. operating surplus) grew by 2.6% in 2003, largely as a result of increases in the value of output for cattle and crops. This follows a decrease in farm incomes of 6.8% in 2001.

OTHER NEWS

Information on Budget 2004 is available on the Department of Finance website.

www.finance.gov.ie

Copies of CSO releases can be downloaded from www.cso.ie

Details of forthcoming statistical releases, including the IMF’s advance calendar can be found at: http://dsbb.imf.org/Applications/web/sddscountrycategorylist/?strcode=IRL

Queries and comments to: Joe Kirwan or Colm O’Connor, Department of Finance, 73-79 Lower Mount Street, Dublin 2.

Phone (01) 6045771 or (01) 6045772, or e-mail:Joe.Kirwan@finance.gov.ie or Colm.O’Connor@finance.gov.ie