Trade in cranes as an indicator

This table summarises exports and imports for SITC 744.34: Tower Cranes and the first quarter and full year outcomes since 2010.  The units are tonnes.

Back in 2010 we were exporting cranes with nearly 2,500 tonnes of them leaving the country.  These exports have fallen off in recent years and in the first three months of 2017 there have been no exports in this category.

On the other side there were limited imports up to 2010 but this began to picked up in 2015 and 2016 and for the first quarter of 2017 imports are up 50 per cent on the same period last year.

The amounts of money involved tend to be relatively small.  The average price involved is generally around €5,000/tonne but the nature of the changes is pretty clear.  Though we do remain a long way from this:

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Impact of Brexit on Exports– it’s about prices so far but watch out for those airplanes

The release today of the December 2016 External Trade figures saw a number links to Ireland’s export performance and the UK referendum on the EU back in June - notably Brexit wipes half a billion euro of Irish exports to Britain.

While it is true that our goods exports to Great Britain were lower by €496 million in 2016 the link to the referendum is less clear-cut.  And with goods imports from Great Britain falling by €1,354 million our net external trade position with Great Britain actually improved by €858 million in 2016.

The reason why imports are lower this year is largely related to refined fuels and natural gas. 

Up to November 2015 we imported €1.7 billion of refined fuels, whereas up to the same point in 2016 these imports were €1.1 billion.  The average price per tonne of these fuels fell from €500 to €385 with the quantity of these exports falling by ten per cent.  In 2015, 82 per cent of refined fuel came from Great Britain; in 2016 this fell to 72 per cent.  Imports from the United States filled the gap rising from six per cent to 11 per cent of imports in this category.  In total we imported three per cent more refined fuels by volume for 28 per cent less by value. 

We only import natural gas from Great Britain and the volume of gas imports are down 33 per cent in 2016. In value terms natural gas imports fell €1 billion to €0.6 billion.  It is these movements in refined fuels and natural gas that account for most of the improvement in Ireland’s balance of trade with Great Britain.

However, it is exports to Great Britain that are primary interest.  Since the shutting down of the “missing trader” VAT scam in 2002 Ireland’s goods exports to Great Britain have been remarkably stable. In 2003, Irish goods exports to GB were €13,488 million; in 2016 they were €13,314 million, just one percent higher in 13 years.

The half a billion drop seen in 2016 is not unusual but it is worth looking a little closer at the categories which are the source of this decrease.

On its own SITC 7 – machinery and transport equipment – experienced a fall equivalent to more than three-quarters of the total fall in goods exports to Great Britain.  We only have the detailed data to November but most of the fall in this category is down to two sub-components:

• SITC 79: Other transport equipment (including aircraft)
• SITC 75: Office machines and automatic data processing machines

In the 11 months to November 2015, we sold 41 wide-bodied aircraft (SITC 792.40) with a value of €501 million to Great Britain.  To the same period in 2016 wide-bodied aircraft sales numbered 32 for a value of €266 million.  This represents a drop in exports of €235 million and is largely down to a small number of decisions taken by an even smaller number of aircraft leasing firms.

For SITC 75 the culprit appears to be storage devices (whether or not with the rest of a system), i.e. SITC 752.70.  Up tp November 2015, we sold €263 million worth of these devices to Great Britain, with exports of €221 million recorded in 2016 – a drop of €42 million.  And this may be a price effect.  In the first 11 months of 2015 the number of units sold was 68,000 while that actually increased to 78,000 in 2016.  So almost half of the drop in the value of goods exports to Great Britain can be attributed to wide-bodied aircraft and the decreasing cost of digital storage devices.

However, while we might be able to dismiss the fall in SITC 7, the drop in food exports to Great Britain is likely to be of real significance.  These exports were down €221 million or 5.5 per cent in 2016 though it should be noted that overall food exports had their best ever year in 2016 and exceeded €10 billion for the first time.

And it is also the case that the poor performance of food exports to the UK was evident right from the start of the year, though did accelerate markedly around the middle of the year (i.e. post the referendum on the EU).

However, whatever export losses were experienced with Great Britain were, in aggregate terms at least, more than offset with increases elsewhere.  The most significant of these increases were in exports to the US and China.  Food exports to the US rose €144 million (up more than 50 per cent in the year) while food exports with China rose €207 million (a rise of almost one-third).   This €351 million rise in food exports to these two markets more than offset the €221 million reduction in sales to Great Britain.

The biggest increase in food exports to China was “Food preparations for infants, for retail sale, or flour, meal, starch or malt extract” (SITC 098.93) which one assumes contains baby formula.  Up to November these exports to China rose to €444 million in 2016 from €305 million the previous year.  It not clear what the extra sales to the US actually comprised.  Exports in the food category “Other food preparations, nes” (SITC 098.99) to the US rose from €37 million to €123 million in the first eleven months of 2016.

So, at an aggregate level, increased food exports to the US and China are offsetting the fall in good exports to Great Britain but it is not clear that the value added from these exports are accruing to Irish residents.  We don’t know who is selling the powdered milk to China and we don’t even know what it is that we are selling more of to the US. 

But a more pertinent question is to determine what exactly it is we are selling less of to Great Britain?  We can answer that using Trade Statistics figures and here are the outturns to November 2016 compared to the same period in 2015 for the three-digit SITC food categories. By November 2016 food exports to Great Britain were running €171 million behind what they had achieved the previous year.

The biggest drop is the €66 million decrease in category 017 other meat, with the majority of this relating to poultry, where exports to Great Britain fell by €47 million.  The next largest category is the anomalous 098 for items not classified elsewhere and within this is 098.93 - food preparations for infants - where exports to GB fell by €40 million.  These  

After those two there was a €34 million drop in cheese exports and a €20 million drop in butter exports through a combination of lower price (possibly via the exchange rate) and slightly lower quantities.  The only other category to show a decline of more than €10 million was that for cocoa and chocolate.

There aren’t too many categories showing increases and the only notable increase was for beef or veal which was up €42 million in the first 11 months of 2016 compared to the same period in 2015.  However, this 6 per cent increase in value should be considered in the context of an 18 per cent increase in volume.  Beef exports to GB rose from 127,000 tonnes to 155,000 tonnes.  Thus, the price per ton of beef exported to GB fell from €5,400 to €4,700. 

If fact if we look at the prices across all categories the price pressures are clear.

The prices are measured per tonne of goods exported in each category so is rather crude.  But the pattern is clear.  Prices are down.  The price of beef exports to Great Britain are 13 per cent lower, cheese prices are nine per cent lower with mushroom prices six per cent lower.

Weighted by the value of export sales in 2016 the average price of food exports to Great Britain are eight per cent lower in 2016 compared to 2015.  This is likely the result of fixed prices in sterling translated into lower euro receipts.  In markets with tight margins this may not be sustainable.  So maybe with these pressures, something like this is merited.  And all this without the UK having actually left the EU.

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A Processor Surge

Here’s yet another unusual chart extracted from Ireland’s External Trade data.

The chart gives monthly exports for category 77 in the Standard Industry Trade Classification: Electrical machinery, apparatus and appliances not elsewhere specified and parts.  In the first half of 2015 exports in this category were €1.4 billion; for the first six months of 2016 exports have surged to €3.2 billion.  The dramatic nature of the increase at the start of 2016 is apparent from the chart.

So what are we exporting over a billion and a half’s worth more of in this category.  We can get added insight from the CSO’s Trade Statistics publication (though the most recent release only gives data to the end of May).  Anyway within that our attention is drawn to subcategory 776.42: Processors and controllers.  Here is the relevant extract from the May 2016 release.

Exports in this sub-category were €421 million in the first five months of 2015 but have reached €1,958 million in the first five months of this year.  Thus processors account for the surge shown in the first chart above.  Over the full year we could be looking at an increase of around €3 billion in this category.  That the primary destinations of these exports are  Israel and the United States should not come as a surprise. 

What may be a little surprising though are the volume changes.  The Trade Statistics also give data on quantities which in the case of many commodities are measured in tonnes – signified by (t).

The quantity given for 2015 is 62 tonnes while that for this year is 52 tonnes.  The notional price of processors given by this data has gone from €7 million a tonne in 2015 to nearly €38 million a tonne this year.  Processors are obviously not a product sold by weight but this change is indicative of something going on. But what?

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Exports: Dipped in Chemicals but Driven by Dollars

This week’s monthly External Trade data from the CSO showed that goods exports in April reached an all-time high of €9.2 billion.  Here are the monthly export and import figures for goods since January 2010.

The rise in exports has also seen the trade balance increase though the recent movement in imports is also important.

As is well understood around 60 per cent of Irish exports come from one sector: chemical and related products and it is this sector which accounts for the recent surge in overall exports.  Chemical exports in the first four months of 2015 are 26 per cent greater than in the equivalent period in 2014.

So what explains this recent increase in pharmaceutical exports?  Typically we could look to Industrial Production data to track what is being produced but those figures data (and for the pharmaceutical sector in particular) are polluted by the effect of external ‘contract manufacturing’.  Here are the monthly industrial production indices for chemical and pharmaceutical products since the start of 2010.

The ‘volume’ index measures the output actually produced in a given month, while the ‘turnover’ index measure output sold in a given month (regardless of when it was produced).  Both measures show a 50 per cent year-to-date increase but a lot of the rise (and volatility) is due to the impact of ‘contract manufacturing’ – this is manufacturing that takes place elsewhere but is booked in Ireland because key parts of the value-adding risks, functions and assets are based here. 

There might have been an increase in pharmaceutical output produced in Ireland (and only goods which physically leave the country are included in the External Trade data) but we can’t see that from the noisy Industrial Production figures.

Is there something else that accounts for the increase in chemical exports? Yes, prices. Or more particularly the currency in which those prices are denominated.  A huge amount of the pharmaceutical output produced in Ireland is generated by US MNCs and these companies price their products in dollars in their transfer pricing agreements.  And what has happened to the USD-EUR exchange rate recently?

Yip, the dollar has appreciated by about 20 per cent against the euro since the middle of 2014.  Thus dollar-denominated prices will have a higher nominal euro value.  And that is precisely what we see if we look at the industrial price index for pharmaceuticals.

Since the middle of 2014 the wholesale price of pharmaceuticals has risen by 15 per cent (which was likely driven by the depreciation of the euro).  It is this factor which accounts for most of the recent rise in the value of pharmaceutical exports shown in the External Trade data.

Will this have much of an impact on GDP? Real GDP growth should not be affected by the price/currency factors shown above.  And there probably won’t be much impact on nominal GDP as the increased value of goods exports pushing up the balance of trade will be offset by increased outbound royalty payments (which will also be dollar denominated) that will reduce the balance of services.  The net effect will be small.  And of course the impact on GNP will be nil unless there is an increase in employment and/or corporation tax payments – but somebody is paying more Corporation Tax.

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Two minor points on the external trade figures

The CSO have releases the goods trade data for July.  Two minor points spring to mind.

1. The balance of trade in food is lower than last year.
2. Wide-bodied passenger aircraft have a big impact on the figures.

More details on these below.

ONE: Some emphasis is put on the positive performance of food exports with a total of €4,911 million of export in the year to July compared to €4,513 million in the equivalent period last year.  This is an 8.8% increase but it is a nominal rather than real figure – price effects are included. 

It is also worth noting that food imports have similarly increased: from €3,058 million in 2012 to €3,477 million this year.

Thus, the balance of trade in food and live animals has actually decreased slightly, falling from €1,455 million in the first seven months of 2012 to €1,434 million this year.

TWO: Although food imports (and also chemical imports) are up overall imports are down.  There was €29.0 billion of goods imports in the period to July 2012 compared to €28.5 billion this year.  The source of the drop is primarily category 79 in the SITC (Standard International Trade Classification).  SITC 79 is ‘Other Transport Equipment’. 

By this time last year imports for this category were €2,025 million.  This year they have fallen to €778 million.  What other transport equipment have we imported €1.2 billion less of this year? Ans: Wide-bodied passenger aircraft.

Here is an extract from the more-detailed Trade Statistics (to June) for category 792.40

In the first six months of 2012 there were 40 aircraft larger than 15,000kg imported worth €1,823 million compared to just 18 such aircraft this year worth €638 million, with such imports from Brazil and the US substantially down.

This reduction will provide a boost to the balance of trade this year but in reality it is little more than the timing of purchase decisions of some of the aircraft leasing companies who are based here.  The improvement in the balance of trade will be offset by a reduction in Investment as measured in the national accounts (GNP/GDP).  There will be no discernible impact to the economy on the ground.

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Half-Year External Trade Data

This morning the CSO released the preliminary external trade data for the first six months of the year.  Final details on merchandise trade for the first five months were also released.  The headline figures are positive with a record seasonally-adjusted trade surplus of €4.1 billion recorded for June.  The €21.9 billion surplus for the first six months of the year is also a new high, ahead of the €21.1 billion recorded for the same period last year.

The trend in imports and exports has been upward for 2011.

During 2008 and 2009 the trade surplus was growing, but not because of any increase in exports.  The trade surplus was growing because imports were falling.  This trend has now reversed and both imports and exports have been improving in 2011. 

Here is the trade balance.  Although June was a record, it is not that much greater than the level seen for several months for the past year or so.

Here is the detailed performance up to the end of May of the export categories used by the CSO.  Click to enlarge.

Exports are more than 6% up on 2010, but excluding chemicals and related produces exports are up less than 1% on last year and are still nearly a quarter down on 2007.  Excluding chemicals exports are only €120 million up on 2010. 

Chemicals and related products (including pharmaceuticals) comprised 62% of total merchandise exports for the first five months of the year and clearly dominate Irish merchandise trade.

Here are Chemical exports since 2005.

If we exclude Chemicals and look at the export performance of the remaining categories, the view is not so positive, though the downward momentum of 2008 and 2009 is slowly being reversed.

The category that has driven most of this decline is Machinery and Transport Equipment.  This category includes computers and these exports are down substantially over the past few years.

On the other exports of Food and Live Animals have been improving in the past 18 months.  These exports only make up one-twelfth of the total but highlight the recent improvement (price increases to the rest of us) in the agri-food sector.

Finally, here is a quick glimpse and the increase in imports and in particular the imports by use data provided by the CSO.

It is the import of production materials that drove the fall in overall imports.  These have begun to recover, albeit slowly.  Imports of consumption goods are also showing a very gradual increase.

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Imports on the rise – but in a good way

Today’s External Trade release shows that exports to March are up 8.5% on the year with imports showing a rise of 12.3% with the net effect of these leading to a rise of 4.4% in the balance of trade (though all of this is due to chemicals).  In the arithmetic of national accounts, imports are subtracted in the calculation that leads to GDP.  However, it is also important to look at the composition of those imports.

The CSO provide a useful table that gives a breakdown of imports by use. Click to enlarge

Imports are up €1.4 billion on the year and there is annual growth in all the categories.  What is noteworthy is that capital and intermediate goods for production make up nearly two-thirds of total imports.

Of the €1.4 billion rise in imports, €0.3 billion is for capital goods for production and €0.6 billion is for intermediate goods for production.  The remaining €0.5 billion is for consumption goods.

On the whole, the rise in imports may subtract from GDP figures now but over the coming months as these capital goods and materials are put into use it will lead to an increase in economic activity and a likely increase in exports which will push GDP up.  Here is the same data in a graph.

The rise in the imports of production materials since the middle of 2010 is evident as well as a gradual recovery in imports for consumption.  The capital goods series is more volatile.

Here are a couple of notable import categories that are also showing increases.

1. Petrol

2. Cars

3.  And some goods involved in production

After scratching around for the past two years, these categories have been showing some smalls signs of growing over the first three months of the year (though they are all well down on the peaks of 2006 and 2007 – see graph here).

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March External Trade Data

It’s been a while since we looked at the CSO’s monthly External Trade data for Merchandise Imports and Exports.  We will get our first look at Services Imports and Exports for 2011 when the Balance of Payments is released with the National Accounts on Thursday.

Here we will examine the March External Trade Release with provisional overall figures for April.

The provisional figures for April show a rise in imports and a fall in exports, though the trend for both series remains positive.  Not surprisingly, these monthly changes mean that the balance of trade declined markedly in April with a fall to its lowest level in 16 months.

As the April figures are only provisional we do not have a breakdown by category that would allow us to explore the drop in exports and rise in imports in April.  The current release does give us the breakdown for March so we can have a look at the trade performance over the first three months of the year.

First up here are exports for the first quarter of the last five years. Click the table to enlarge.

The figures for 2011 are remarkable and for all the named categories, exports are ahead of the 2010 levels.  In fact the only  category that is behind on its 2010 performance is the generic “Other Commodities” category which only makes up 0.1% of the total but has shown a rather alarming 96% fall.  In categories making up 99.9% of the total exports are showing an annual increase.  There may be some classification issues at play here.

As per usual caution must be exercised when looking at aggregate merchandise trade data from Ireland such is the dominance of the Chemical and Pharmaceutical sectors in the figures.  For the first three months of 2011, exports from this category made up 62.6% of the total and are up 13.5% on 2010.  Of the €1.8 billion increase in exports, €1.7 billion can be accounted for by the Chemicals and Related Products category.  Excluding chemicals, exports are showing some annual growth but it is a much more modest 1.1%.

Compared to pre-crisis levels from 2007, exports are also showing positive performance with a 3.1% increase.  Again, however, this is largely down to increases in chemicals and pharmaceuticals.  Excluding Chemicals, Irish exports are still 24.6% behind those levels recorded in 2007 with most of this attributed to the Machinery and Transport Equipment category, and within that most of the drop is as a result of the fall in computer exports.

Some categories are up on their 2007 levels, most notably Food and Live Animals and Miscellaneous Manufactured Items which between them make up about one-sixth of our exports.

Next we turn to imports.  Again click the table to enlarge.

As per exports, imports are showing growth on their 2010 levels and this can be seen across all the main categories.  We will return to imports in a few minutes when we look at the figures on imports by use.

The final table by category is for the Balance of Trade.  Click to enlarge.

The trade balance for 2011 is at record levels and is 82% higher than that recorded in 2007 but it must be remembered that nearly 90% of this rise is due to the fall in imports rather than a rise in exports.

A second noticeable element is the dominance that the chemicals sector plays in determining our trade balance.  In fact, excluding Chemicals the balance of trade has been continually in deficit.  Up to 2010 this deficit had been declining but this was reversed in 2011.

The role Chemicals play in our export data cannot be overstated.  Over the past five years chemical exports have grown from about €3.5 billion a month to €4.5 billion a month with a large spike in March 2011 to €5.5 billion.

Excluding chemicals, the exports performance is not as “robust” or “resilient” as the first graph above would indicate, though there was a stabilisation from early 2010 and some tentative signs of improvement later in the year.

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2010 External Trade Figures: Dipped in Chemicals

The CSO have released the preliminary 2010 External Trade figures.  They show a record trade surplus of €44.7 billion.  This is up on the 2009 surplus of €39.2 billion and nearly €20 billion ahead of the pre-crash surplus of €25.7 billion recorded in 2007.  If one was to report a positive economic indicator for the Irish economy, our surging trade surplus would be it.

The trade balance is significantly ahead of the levels recorded at the end of the export-led Phase One of the Celtic Tiger in 2002.  As the construction- and credit-fuelled Phase Two of the Celtic Tiger took hold from 2003 to 2007 the trade balance fell.  However, since the onset of the current recession the trade balance has gone into a steep incline and this has made a substantial positive contribution to our growth figures (though one that has been swamped by the collapse of some sectors of the domestic economy).

So the prospects of the much-claimed “export-led recovery” must be good, right?  Not quite, I’m afraid.  The trade balance is the difference between exports and imports.  If we look at these we see that the current increase in the trade balance is not due to the same factors that drove the increases during the Celtic Tiger Phase One.

The period from 1995 to 2002 was characterised by rising exports and imports, with the faster rate of rising exports increasing the trade balance.   Irish export growth stalled in 2002 (and has not recovered) and in the period 2003 to 2007 the trade balance narrowed as imports rose.  Finally, it is pretty evident that since 2008 the huge increase in the trade balance has very little to do with a stellar export performance (strong, resilient, and robust are popular descriptors).  Instead, the trade balance increased because imports collapsed.

Imports are now back to a level last seen in 1999 and while some might be crowing about our export performance, Irish exports in 2010 were lower than they were in both 2001 and 2002.   While a growing trade balance is good for growth arithmetic, it does not have a significant real effect on the economy if it is based on falling imports.  For an analysis of this see our post on Ireland’s import performance from back in January.  This gives a different insight to the otherwise positive spin that has been put on our trade figures and why this drop in imports is actually bad for the economy.

Here, we will continue with some analysis of the monthly trade figures from the CSO release.

The drop off in imports since 2007 is self-evident.  The performance of our exports has been relatively stable for the five years shown, though the slight decline that was seen towards the end of 2009 has been reversed and exports in 2010 (€90.0 billion) were very slightly ahead of the those from 2007 (€89.2 billion).  A “export-led recovery” will need a bit more than a 0.9% increase in exports to make any dent on our employment crisis.

Here comes the good news again but this time in monthly figures.  Our monthly trade surplus is now up to around €4 billion a month.

As per usual it is important to consider the key sectors in our merchandise exports.  Of course, in Ireland’s case it’s actually just one sector.  With only preliminary figures available for December, data by category until November 2010 has been published and this is shown in the following graph.

Nearly 60% of Irish merchandise exports are accounted for by one category – Chemicals and Related Products – and this category itself is dominated by one sub-category – Medical and Pharmaceutical Products.  See a previous post for the the impact of the chemical and pharmaceutical sector on the Irish economy using Forfás data.

Here are our pharmaceutical exports since 2005.

It would be great if employment in this sector was also close to doubling since 2007 but it is unchanged – the same workers are generating nearly twice as many exports.  In fact, workers in the chemical sector make up about 1% of the workforce and generate nearly 60% of our trade exports.

If we take out the capital intensive chemicals sector from out export figures and see what has happened across the other sectors we do not see the “strong, resilient and robust” performance that is frequently referred to.

 

In 2007, exports excluding chemicals were €43.6 billion in the first 11 months of the year.  In first 11 months of 2010 the equivalent figure was €33.6 billion – a drop of 21.1%.  Not much sign of strength here.  The “recovery” in 2010 has seen a rise of 0.6% in these exports on the 2009 figures.

Irish export figures are been masked by the dominating effect of the high value chemical and pharmaceutical sector.  If we take this sector our (which is “booming” but has added zero jobs) our export performance is scratchy at best.  If we take this one sector out of the trade balance what do we see?

Yikes.  For the first 11 months of 2010 Ireland had a total trade surplus of €41.2 billion.  Take the impact of chemicals out of that and there was a trade surplus of only €268 million.  The trade balance in the chemicals sector is equivalent to 99.4% of Ireland’s total trade surplus.  Any chance of an extension on those patents??

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The Computer Services Sector in Ireland

After our analysis of the largest merchandise export sector (chemicals at 60% of the total) we will now consider Ireland’s largest services export sector. According to the most recent Balance of Payments data, Computer Services now account for close to 40% of our total service exports.

You can find some analysis of the official CSO data here.  The CSO data is great for the quantities but is lacking information on the impact.  To this end we have turned to the Annual Business Survey of Economic Impact from Forfás, which by value covers about 85% of our total exports (and the missing proportion is largely tourism and travel).

Here’s a run through our Computer Services sector using this data.  And like the Chemicals sector we start with the same conclusion.  Exports have increased (particularly since 2005) but direct expenditure in the Irish economy hasn’t budged.

Since 2003 exports of computer services have grown by 76.8% from €27.9 billion to €47.4 billion.  During this period direct expenditure in the Irish economy has fallen by 13.1% from €11.5 billion to €10.0 billion.

Like the Chemicals sector, Computer Services are dominated by foreign-owned firms which in 2009 accounted for 98.2% of exports in the sector.

As expected most of the contribution to the Irish economy comes from the foreign-owned sector, but this is down on the levels seen in 2001-2003 period.

The computer services sector does buy nearly €7 billion of materials a year, but the vast bulk of this comes from abroad.

Not surprisingly, these companies buy a lot of services, but unlike the Chemicals sector where only 6.4% of services are bought from Irish sources, in the Computer Services sector the purchase of Irish services makes up 41.7% of the total.  In fact, across the companies in the survey purchases of Irish services totalled €13.6 billion in 2009.  At €6.4 billion purchases from the Computer Services sector made up 47.3% of the total.

We can get some information about the purchases of these Irish services by looking at a breakdown of the type of companies buying the services.

Over half of the purchases of Irish services are by Computer Programming companies.  Computer Consultancy companies purchase the bulk of the remainder with the than 5% bought by Facilities Management companies.

Although the purchases of Irish materials and services by these companies has declined from peaks seen nearly a decade, payroll expenses have risen.

Total payroll expenses rose from €2.1 billion in 2000 to just under €3.0 billion in 2009, with most of this rise coming from foreign-owned companies.  However, this has not been because of an increase in employment.  Again we have the situation of a sector with booming exports offering no employment growth.

[Forfás do not directly provide the employment numbers.  These figures are derived from the Total Sales and Average Sales per Employee figures and are cross checked against Total Payroll and Average Payroll per Employee figures.]

Total employment was 52,800 in 2000 and had FALLEN to 49,700 in 2009.  This 5.8% drop in employment took place during the same period when exports rose by 80%.  Thus the increased payroll costs are due to increases in the costs per employee.

Average payroll costs in the computer services sector was €62,400 and unlike the Chemicals sector the cost for Irish- and Foreign-owned companies were largely the same.

What isn’t the same is the added value per employee.  There was always a gap between Irish and Foreign-owned firms but beginning in 2005, this gap has ballooned.  In 2009, foreign-owned firms had an average added value per employee of €745,000, dwarfing €104,000 added value per employee in Irish-owned firms

Here is a breakdown of added value by company type.  Can you spot the series break??

Those Computer Facilities Management workers sure are productive!!  Looking at a breakdown of exports by the type of company.

We see that, while all categories are growing, most of the growth in computer services exports is attributable to Computer Facilities Management (again with a huge jump after 2005).  This sector must be contributing hugely to the economy.  Let’s see.

Where’s the jump? Initially I thought that this graph was wrong but unless the original Forfás data is right then this is what has happened.  The the Computer Facilities Management sector exports have increased from €1.8 billion in 2000 to €16.2 billion in 2009.  This is an increase of nearly 800%.

At the same time the direct expenditure by companies in this sector (i.e. their contribution to the economy) has gone from €733 million to €810 million, a rise of 10%.  Maybe it’s worth putting these two lines on the same graph.

And  what about employment in this sector that is clearly driving our “export-led growth”?

A sector that has seen exports rise by nearly €12 billion since 2005 (our total exports were €145 billion in 2009) has seen employment FALL from 11,000 in 2005 to 7,600 in 2009.

Sometimes I’m sorry I ask myself these questions.

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