Irish GDP rose by 4.1% year on year in Q1, led by an impressive export performance (+7.4% year on year).
This excellent performance is likely to be sustained over the rest of the year, with a range of short term indicators are pointing to on-going progress in the Irish economy.
The Investec/Markit PMI’s for both the manufacturing and services sector are signalling on-going growth, with the manufacturing sector expanding for the 13th month, and the services sector expanding for the 23rd consecutive month. The services sector expanded at its fastest rate since February 2007 in June.
The numbers employed increased for the 6th consecutive quarter in Q1 2014, with a total increase of almost 70,000 employed, the majority in full time positions. This strong performance is being reflected in the unemployment statistics (11.6% in June from peak of 15.1% in Feb 12), and in the public finances (income tax +7.4% YOY Jan-June). Overall, The European Commission is forecasting employment growth of 2.4% this year. Despite this significant wage growth is not expected given the low inflation environment.
On-going progress in the domestic economy continues to bolster the public finances. For H1 2014 tax revenue was up 4.9% with income tax (+7.4%) and VAT (+7.3%) leading the way. Fiscal discipline is being maintained with voted expenditure just below target. Overall total revenues were up 8.4% in H1, and total spending was up just 1.9%.
IDA clients saw a 4th year of employment growth in 2013, with employment increasing to 166,184. Client contribution to the economy has also increased significantly in 2012, despite the impact of the patent cliff. Exports were up 5% to €121bn, and Irish economy spend (goods, services, payroll) was up 5% to €21bn. IDA clients also increased their R&D expenditure by 18% to €1.3bn.
Source: European Commission Spring forecast 2014
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