‌‌‌‌‌‌Economic Indicators 2017

The Economic Indicators are infographics which present some key indicators on the Irish economy, and are published each month by L&RS.

Economic Indicators September 2017

Economic Indicators August 2017

Economic Indicator July 2017

Economic Indicators June 2017

Economic Indicator May 2017

Economic Indicators April 2017

Economic Indicators March 2017

Economic Indicators February 2017

Economic Indicators January 2017

The following is a glossary for the monthly Economic Indicators series of infographics.

Economic Growth Goods Trade Vehicles Licenced Retail Sales
       
Consumer Prices Government Finances      Unemployment Housing
       
Exchequer Statements  Services Trade
 

Economic Growth

Gross Domestic Product (GDP) measures the total output of the economy regardless of the producer’s nationality.  This generates income but not all income is received by Irish residents. Gross National Product (GNP) differs from GDP as it takes into account the net impact of incomes sent or received from Irish sources abroad. As such, for Ireland, GDP is higher than GNP.

GDP and GNP measures are used to examine the performance of an economy (as a reference for how large the economy is and how well it is performing) and administrative purposes e.g. adherence to fiscal rules. An increase in GDP/GNP indicates that the economy is generally improving.

However, GDP/GNP should only be used in context as a general reference of economic performance. One measure should not be taken to explain all the complexities of an economy. For example, GDP does not indicate the quality of life and general wellbeing of citizens.

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Goods Trade

Trade patterns show the movements of goods between countries.

Trade can have many benefits including enhancing competitiveness and specialisation, reducing costs, presenting new market opportunities, increasing choice and improving relationships between nations.

One way to measure a nation’s economy is through an assessment of what goods and services it trades. Trade is particularly important for Ireland as it is classified as a small, open economy.

The composition of goods exports and imports is as follows:

Food and live animals

Live animals; meat and meat preparations; dairy products and birds’ eggs; fish, crustaceans, molluscs and preparations thereof; cereals and cereal preparations; vegetables and fruit; sugars, sugar preparations and honey; coffee, tea, cocoa, spices and manufactures thereof; feeding stuff for animals (excluding unmilled cereals; and miscellaneous edible products and preparations.

Beverages and tobacco

Beverages; tobacco and tobacco manufactures.

Crude materials, inedible, except fuels

Hides, skins and furskins, raw; oil seeds and oleaginous fruits; crude rubber (including synthetic and reclaimed); cork and wood; pulp and waste paper; textile fibres and their wastes; crude fertilisers and minerals (excluding coal, petroleum and precious stones); metalliferous ores and metal scrap; crude animal and vegetable materials.

Mineral fuels, lubricants and related materials

Coal, coke, and briquettes; petroleum, petroleum products and related materials; gas, natural and manufactured; and electric current.

Animal and vegetable oils, fats and waxes

Animal oils and fats; fixed vegetable fats and oils; animal or vegetable fats and oils; processed; waxes.

Chemicals and related products

Organic chemicals; inorganic chemicals; dyeing, tanning and colouring materials; medical and pharmaceutical products; essential oils; perfume materials; toilet and cleansing preparations; fertilisers; plastics in primary forms; plastics in non-primary forms; chemical materials and products.

Manufactured goods classified chiefly by material

Leather; leather manufactures; dressed furskins; rubber manufactures; cork and wood manufactures (excluding furniture); paper, paperboard and articles thereof; textile yarn, fabrics, made-up articles and related products; non-metallic mineral manufactures; iron and steel; non-ferrous metals and manufactures of metals.

Machinery and transport equipment

Power generating machinery and equipment; machinery specialised for particular industries; metalworking machinery; general industrial machinery and equipment and parts; office machines and automatic data processing machines (including computers); telecommunications and sound equipment; electrical machinery, apparatus and appliances and parts; road vehicles (including air-cushion vehicles); and other transport equipment (including aircraft).

Miscellaneous manufactured articles

Prefab buildings; plumbing and electrical fixtures and fittings; furniture and parts thereof; bedding, cushions etc.; travel goods handbags and similar containers; articles of apparel; clothing accessories; footwear; professional, scientific and controlling apparatus; photographic apparatus; optical goods; watches and clocks; miscellaneous manufactures articles.

Commodities and transactions not classified elsewhere

Unclassified estimates

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Services Trade

The composition of services exports and imports is as follows:

Repairs & processing
Repairs and Processing covers repair work and activities such as processing, assembly, labelling and packaging by residents on goods that are owned by non-residents (and vice versa). The value includes any parts or materials supplied by the repairer and included in the charge.

Transport
Transport services cover the carriage of passengers, the movement of freight, oil and gas pipeline transport and electricity transmission, along with the chartering of carriers and associated crew. Supporting and auxiliary services (e.g. cargo handling and storage, cleaning in ferry ports and airports, salvage operations) are also included.

Tourism and travel
The category tourism and travel essentially covers the goods and services acquired in one economy by a resident of another economy during visits of less than one year.

Communications
This covers postal and courier services and telecommunications services. Postal and courier services include the pick-up, transport and delivery of letters, postcards, printed matter, parcels and packages. Telecommunications services include the transmission of sound, images and other information by telephone, radio and television broadcasting, electronic mail, facsimile services and by satellite delivery. Also included are cellular telephone services and internet access services.

Insurance
The value of insurance services provided to non-residents by resident insurers (exports) is compiled from survey returns. It is estimated according to the international standards as the value of direct and supplementary premiums earned less the value of claims payable less increases in the actuarial element of insurance technical reserves.

The value of insurance services purchased by residents from non-resident insurers (imports) is currently estimated primarily as insurance premiums paid less claims received.

Financial services
This item covers financial intermediation and auxiliary services, except those of life insurance and pension funding and non-life insurance.

Computer services
The computer services component consists of hardware and software-related services and data-processing services.

Royalties/licences
This item covers franchises and similar rights as well as other royalties and licence fees. Franchises and similar rights comprise international payments and receipts of franchising fees and the royalties paid for the use of registered trademarks.

Other business services
This item covers receivables and payables for the following services, the data for which are obtained from survey returns: (a) research and development; (b) operational leasing; (c) legal, accounting and other professional services; (d) advertising and market research; (e) trade-related services; (f) architectural, engineering and other technical services; and (g) other services.

Other services not elsewhere specified
This includes government services, personal, cultural and recreational services, construction services and any other services transacted between residents and non-residents.

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Vehicles Licenced

This measure is based on vehicle licensing i.e. when a valid motor tax disc is issued for the first time.

At an overall level, sales of vehicles can provide a useful insight as to the direction of the economy and consumer sentiment, as it is a significant component of consumer spending i.e. an increase in sales may indicate improved consumer sentiment and incomes.

More specifically vehicle sales show market conditions for the specific industry itself.

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Retail Sales

The retail sales index is mainly intended to measure short term trends as it does not reflect changes in retail structures between updates. It covers retail sales of retail businesses, wholesale businesses with sizeable retailing activity and separate establishments of non-distribution enterprises.

This is a timely indicator of performance of the industry but also of activity as a whole.  Consumer spending is a large part of economic output so if consumers are spending at lower levels this may indicate a slowdown in the economy.

Care should be taken when reviewing this indicator as it can be subject to substantial month to month changes. Therefore, a longer term view of changes should provide a more accurate picture.

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Consumer Prices

The purpose of the consumer price index (CPI) is to measure the change in the average level of prices of consumer goods and services.

Among others, the CPI may be used as:

An economic indicator: for example as a measure of inflation it may be used to guide the decision making of government; and

A price deflator: this means that it is used to adjust other data series for price changes e.g. removing inflation from GDP to make comparisons over time or between countries, or for assessments of purchasing power.

The harmonised index of consumer prices (HICP) is also designed to measure inflation. The HICP allows for international comparisons of inflation rates between EU Member States. The difference between the CPI and HIPC is that the HIPC excludes: mortgage interest; building materials; motor tax (bikes and cars); house insurance; motor car insurance; union subscriptions and the local property tax.

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Government Finances

Management of finances has an important role in government meeting its objectives. For example, it allows the government to provide public goods and services, but also creates risks for current and future generations. Government management of finances affects revenues (e.g. taxes), costs (e.g. borrowing money), investment (e.g. risk) and a country’s standing in the global economy.

Government finance statistics also form the basis for fiscal monitoring in Europe. EU fiscal rules bind EU governments to commitments (e.g. EU Treaty defines an excessive budget deficit as one greater than 3% of GDP and public debt is considered excessive if it exceeds 60% of GDP without diminishing at an adequate rate).

General government deficit/surplus is equal to total revenues minus total expenditure and is the standard European measure of the fiscal balance.

General government gross debt (GGD) is the most comprehensive measure of government debt and an internationally standardised measure. GGD equals the  gross liabilities of the consolidated general government sector i.e. debt owed by all government bodies (most public sector bodies but not publicly owned banks, NAMA Investment Ltd., and commercially-operated State companies which cover a majority of their operating costs through sales) to third parties outside government. Money owed by one entity within general government to another is excluded.

The largest component of GGD is gross national debt. This debt is the net accumulation of annual budget deficits i.e. borrowings by the Exchequer undertaken by the National Treasury Management Agency (NTMA). However, debt itself is not inherently bad as it can be used to boost long term growth prospects in the economy.

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Unemployment

Most people must work to earn a wage as their primary source of income, and so those without employment generally have a lower level of total income. Employment can reduce inequality and poverty, and help increase a nation’s productivity and economic activity.

The quarterly CSO Quarterly National Household Survey (QNHS) provides benchmark estimates of employment and unemployment for each quarter. These are then used to compile monthly data. For months where quarterly unemployment data is not yet available, the ratio of the QNHS monthly estimate to the Live Register monthly estimate is used to extrapolate a monthly QNHS estimate. Note that the Live Register is not designed as a measurement of unemployment. Instead, it measures ‘claimants’ i.e. those registering for unemployment assistance/benefit and other such supports and includes part-time, casual and seasonal workers receiving supports. It does however provide a short-term trend indicator which tracks patterns of unemployment, particularly geographically.

Persons unemployed are described as persons who, in the week before the QNHS, were without work and available for work within the next two weeks, and had taken specific steps in the preceding four weeks to find work. The upper age limit to classify persons as unemployed is 74 years.

The unemployment rate is the number of unemployed as a percentage of the total labour force (employed and unemployed) aged 15 – 74 years.

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Housing

Residential Rent Index

The private residential tenancies board (PRTB) commissioned the Economic and Social Research Institute (ESRI) to produce the index on their behalf. The index measures the change in the average level of prices paid for residential properties sold in Ireland.

The index is compiled using data on mortgage drawdowns by eight main mortgage lending institutions. Therefore, property transactions not funded by a mortgage are not included in the index.

The private rented sector is an important part of Ireland’s housing policy. Among others, the index is of use for informing researchers, analysts and government.

Residential Property Prices

Residential property prices are important as the purchase of such a property (house or apartment) is generally the largest single purchase of individuals/households and therefore changes in prices can have significant effects on the economy e.g. can directly impact consumption levels and employment in an economy.

House Completions

House completions are based on the number of new dwellings connected by ESB Networks to the electricity supply. Local Authority completions do not include second hand houses acquired by them.

The level of house completion is a useful indicator as a house is one of the most important aspects of a person’s life. House completions can help create estimates for consumer activity in other aspects of the economy e.g. related goods and services purchases.

Mortgages

Mortgage activity can be used to assess overall credit and investment activity. Mortgages in arrears provide an indication of the health of household finances and raises issues of potential impacts on the health of the financial institution in an economy. It can be used to inform policy making decisions. A mortgage arrears problem arises as soon as the borrower fails to make a mortgage repayment by the due date.

A residential mortgage loan account means an account which records loans to individuals for house or apartment purchase, renovation, improvement or own construction which is or will be occupied by the borrower as his/her principal private residence. Top up of existing mortgages and re-mortgages are also recorded. Only mortgages on properties in the State are included.

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Exchequer Statements

The Exchequer Statement covers the cash inflows and outflows of Central Government’s main treasury account – the Central Fund. Revenue items include tax receipts, non-tax revenues and capital receipts. Expenditure is composed of voted and non-voted expenditures.

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