Irish Economy: Production for Manufacturing Industries for October 2014 was 10.0% higher than in September 2014, according to the CSO today. On an annual basis production for October 2014 increased by 38.5% when compared with October 2013. The seasonally adjusted volume of industrial production for Manufacturing Industries for the three months August 2014 to October was 3.8% higher than in the preceding three month period - this surge in production seems ridiculous when jobs in industry have fallen in the past year.
The “Modern” Sector, comprising a number of high-technology and chemical sectors, showed a monthly increase in production for October 2014 of 9.5%. There was a monthly increase of 3.5% in the “Traditional” Sector.
There was an increase of 8.9% in the seasonally adjusted industrial turnover index for Manufacturing Industries in October 2014 when compared with September 2014. On an annual basis turnover increased by 34.6% when compared with October 2013.
The latest official jobs data published last week show that jobs in industry grew by 3,000 in Q3, but they were down 3,000 in the 12 months to September 2014.
Last week, the Fiscal Advisory Council highlighted that contract manufacturing overseas, which is booked in Ireland for tax avoidance purposes, accounted for 43% of the rise in GDP (gross domestic product) in the first half of 2014.
43% of rise in H1 2014 GDP from manufacturing overseas - Irish Fiscal Council
Irish Economy 2014: Tourism activities account for half the jobs added since Q1 2011
The idiot/ eejit's guide to distorted Irish national economic data
So Irish industrial production data includes for example the output of Dell's PC plant in Poland!
David McNamara, economist at Davy, comments - - "Industrial production data for October show output surging in the second half of the year, with industry set to bounce back strongly in 2014 following a 3% decline in 2013. In October, output was up 10% on the month and 38.5% on the year. The broad sector breakdown shows both modern and traditional sectors contributing to growth. Modern sector output, largely pharmaceuticals, was up 9.5% month-on-month (mom) and 49% year-on-year (yoy), while traditional sector output was up 3.5% mom and 17.2% yoy.
This suggests that industry and exports made a further strong contribution to Irish GDP growth in H2, ahead of the Q3 release next week. In the year to Q2, GDP growth was up 7.7%, helped by strong recoveries in domestic demand and net exports. One notable feature of export growth in the first half of the year was the strong positive impact of so- called ‘contracted production’. This involves Irish-based firms contracting production in a second country, with goods shipped to a third country. Although not captured in the monthly trade data, the activity is counted in Ireland’s exports and monthly industrial production numbers, adding a further layer of uncertainty to GDP numbers.
The potential sector or firm-specific nature of this type of activity means that the positive impact on net trade in H1 could quickly unwind and that the final out-turn for GDP is therefore uncertain. Nonetheless, the industry data so far in H2 suggest no let-up in the pace of growth seen in H1, with a broad spread of sectors contributing to the recovery in output. Eight of the nine largest sectors of industry have posted annual growth in the three months to October, led by the pharmaceuticals sector."