Irish industrial production plunged 12.7% in December 2014 due to volatile data from the pharmaceutical sector including tax-avoidance related booking of foreign manufacturing in Ireland.
The Central Bank estimated in its quarterly bulletin this week that exports grew by almost 11% in 2014 but possibly half of that is fake related to the accounting transactions that convert overseas output to Irish (customs data show that the goods are not imported).
The idiot/ eejit's guide to distorted Irish national economic data
43% of rise in H1 2014 GDP from manufacturing overseas - Irish Fiscal Council
Industrial production for December 2014 was 12.7% lower than in November 2014. On an annual basis production for December 2014 increased by 19.4% when compared with December 2013.
The CSO said that seasonally adjusted volume of industrial production for Manufacturing Industries for the three months October 2014 to December 2014 was 8.3% higher than in the preceding three month period.
The “Modern” Sector, comprising a number of high-technology and chemical sectors, showed a monthly decrease in production for December 2014 of 19.2%. There was a monthly increase of 1.2% in the “Traditional” Sector.
There was a increase of 1.1% in the seasonally adjusted industrial turnover index for Manufacturing Industries in December 2014 when compared with November 2014. On an annual basis turnover increased by 14.2% when compared with December 2013.
The annual change fell from 33% in November to 19.4% in December and economists at brokers said in January:
"All in all, Ireland's manufacturing sector is set for its fastest pace of growth since 1998," said David McNamara of Davy.
Alan McQuaid of Merrion said the data underlined how well the Irish economy is doing compared with the rest of the Eurozone.
"Based on the figures up to November and on the strong PMI data, we are now looking for manufacturing output for 2014 as a whole to be around 23% higher than 2013, following a decline of 2.1% in the previous year," he said.
"Another strong double-digit rise is envisaged for 2015" - why would a double-digit rise be expected in 2015 unless there is a further surge in fake transactions?
Conall Mac Coille, chief economist at Davy, commented today: "Investors should not make too much of the volatile 12% fall in industrial production in December, which entirely reflects the erratic modern sector.
The bigger picture is that 2014 saw a strong rebound in Irish industrial production. True, the 30% growth in the modern sector has been artificially inflated by contract manufacturing among pharmaceutical companies. Nonetheless, traditional sector output rose by 6.8% in 2014. Clearly, Ireland’s exposure to the UK and concentration in defensive sectors such as food has protected it from weak demand in Europe. The Irish manufacturing PMI at 55.5 in January still points to robust growth heading into 2015."