Increased traffic points to economic growth

The Irish economy is growing but quantifying the amount of growth using the National Accounts is difficult because of various distorting effects.  This isn’t an item to determine the amount of growth but adds a factor that suggests the growth is positive.

The National Roads Authority have traffic counters at numerous locations around the country.  The data isn’t the easiest to compile but clicking the green dots on this map provides Adjusted Average Daily Traffic (AADT) figures for 2013 and 2014.  The years are not directly comparable (the data only begin in March 2013) but for most of the locations the daily averages are higher in 2014.

The site provides more detailed information and the following looks at some of the main arterial routes into Cork City for the first 16 days of the month of December.  The eight locations are shown here (click to enlarge).

The data for the locations are summarised here:

For six of the eight locations daily traffic volumes are up on this time last year.  It should be noted that no attempt is made to account for differences between the two years.  These could be road works, road improvements, the weather or other factors.

There is a noticeable difference between the changes to the weekday and weekend averages with greater increases seen for weekend volumes.

Only the N27 (Cork Airport-Kinsale) shows volume decreases on all measures.  This may be the result of job losses in the Airport Business Park.

In aggregate across the eight locations traffic into and around Cork city is up around 3 per cent on last year.  Weekday (or working day) volumes are up 2 per cent and weekend volumes are up 5 per cent.

It is hard to know what a 3 per cent increase in traffic volumes means in economic growth terms but at the very least we can say that there is increased activity around Cork.

Although not looked at in the same detail, one location on the M50 (Dublin) shows a daily volume increase of 3.7 per cent and a location on the M7 (in Limerick) recorded an increase of 5.7 per cent.  It looks like traffic volumes are higher in many locations.

S&P statement on upgrade Ireland to A

The statement accompanying S&P’s upgrade of Irish government debt from A- to A is below the fold – though there is little of note in it bar the indication that a further upgrade is a possibility even though they have put the outlook at stable.

There are five more steps back to AAA ---  A+, AA-, AA, AA+ and then AAA.

Unemployment rate falls below 30-year average

The CSO have data on the ‘seasonally adjusted standardised unemployment rate’ back to January 1983.  The rate is currently benchmarked to the QNHS and monthly updates are provided using the Live Register.  With today’s Live Register data the CSO estimate the rate to be 10.7 per cent. 

The average from 1983 to today is 10.9 per cent.  The current 10.7 per cent is the first time the rate has been below the average since February 2009 (when the rate of 10.2 per cent was below the then average of 10.4 per cent)

The horizontal red line is the average using all data from 1983 to the present time; the green line is a moving average using the data from 1983 to each month; and the orange line is a 10-year moving average for each period.

At-risk-of-poverty rates: Ireland and Sweden decomposed

Here is a chart of the at-risk-of-poverty rate for the population aged under 60 in each of the 28 EU countries.  The weighted-average for the EU15 is 17.4 per cent. 

The highlighted countries are Ireland and Sweden which are both below the EU15 average, though Sweden (7th lowest) is more so than Ireland (16th lowest).  The income thresholds used are €14,832 in Sweden and €11,447 in Ireland, though other differences also matter.

Here is a table that looks at the at-risk-of-poverty rates (again for those aged under 60) but decomposed by the work intensity of the household.  The rates for Ireland and Sweden are again highlighted.

The rankings are not inverted!  For all work intensity levels, Ireland has a lower at-risk-of-poverty rate than Sweden and in most cases by a very large amount.

Ireland has the lowest at-risk-of-poverty rates for people in households with medium and low levels of work intensity.  Ireland is only outside the top four for households with very-low work intensity (6th) but the gap to Sweden (27th) is very large.  In Ireland 46.7 per cent of people aged under 60 who live in households with very-low work intensity are deemed to be at-risk-of-poverty; in Sweden it is 71.7 per cent and as can be seen this is the second highest in the EU.

By work intensity Ireland scores 2, 4, 1, 1, 6 for AROP yet only has the 16th lowest overall rate in the EU.  In contrast Sweden scores 14, 24, 16, 25 and 27 and has the 7th lowest overall AROP rate in the EU for people aged under 60.

Whatever we may want to copy from Sweden it would not appear that the interaction of their tax and transfer system with work intensity is one of them.  Ireland’s tax and transfer system means that households with low and very-low work intensity have a substantially lower at-risk-of-poverty rate then their equivalents in Sweden.  The table above suggests that increased progressive income tax and increased transfer payments would have limited impact on the overall at-risk-of-poverty rate.

If we artificially apply the Irish AROP rates by work-intensity of the household to the Swedish distribution of the population by the work-intensity of the household the resulting overall AROP rate would be less than six per cent.

Obviously, as this indicates the overall rate is determined by the composition of households in each country.  Ireland must have a greater proportion of higher-risk households – and we do by some distance.

[The figures for Sweden sum to 98.2 per cent rather than 100.  For Ireland the sum is 99.4 per cent which is in the realm of rounding errors.]

We can see that Sweden has the lowest proportion of medium-, low-  and very-low work intensity households in the EU.  In contrast Ireland has the third-highest proportion of low work intensity households and the highest proportion of very-low work intensity households in the EU.

Again, we can conclude that the composition of household types is different.  And it is.

Ireland has significantly fewer single-person households and significantly more households with children.  Ireland also has more three-adult households.

There is considerable noise in Ireland about our at-risk-of-poverty rates (with much of it excluding the first three words of the phrase) and our ranking relative to other countries.  Sweden has a lower AROP rate than Ireland but actually understanding why that is so requires a journey that most go beyond tax and transfers yet the debate in Ireland rarely does so.

To conclude here is a big table with the at-risk-of-poverty rates by household types shown in the previous table.  Click to enlarge.

Unsurprisingly, Ireland performs worse than Sweden for almost all household types.  This is likely a function of the work-intensity figures shown earlier.

Ireland performs significantly better for one-person aged over 65 households (16.3 per cent versus 36.7 per cent) and marginally better for single parent households (31.1 per cent versus 33.3 per cent).  For all other household types Ireland underperforms Sweden.

A final note on the above table is that Ireland has a lower at-risk-of-poverty rate than the EU15 average for all household types with children.

• Single person with dependent children: 31.1% v 33.6
• Two adults with one dependent child: 10.4% 13.1%
• Two adults with two dependent children: 13.4% v 14.9%
• Two adults with 3+ dependent children: 17.9% v 23.3%
• Three adults with dependent children: 17.5% v 20.7%

Deprivation rates decomposed

Eurostat measures deprivation using the following circumstances:

• Economic Strain
• Inability to keep home adequately warm
• Inability to afford paying for one week annual holiday away from home
• Inability to afford a meal with meat, chicken, fish (or vegetarian equivalent) every second day
• Inability to face unexpected financial expenses
• Arrears (mortgage or rent, utility bills or hire purchase)
• Durables Deprivation
• Enforced lack of a telephone
• Enforced lack of a colour TV
• Enforced lack of a washing machine
• Enforced lack of a personal car

When deprivation is counted as a household experiencing four or more of this items Ireland fares badly.  Only Italy and Greece of the EU15 have higher rates.

The following table tries to provide the detail behind the topline figures by ranking EU countries for each of the individual deprivation items.  Click to enlarge.

Ireland performs better than the EU15 average for:

• Adequate heating – 8.5% v 9.5%
• Afford a meal with meat – 3.9% v 8.1%
• Colour television – 0.3% v 0.3%
• Washing machine – 0.3% v 0.5%

And is fairly close to the EU15 average for:

• Telephone – 0.4% v 0.3%
• Private Car – 8.0% v 6.0%

The measures which Ireland shows up poorly are:

• Arrears – 23.0% v 9.3%
• Afford a holiday – 50.6% v 33.5%
• Dealing with unexpected expenses 56.4% v 36.3%

If we track the changes of the nine deprivations items in Ireland from 2003 to 2012 we see the following:

The increases in the last three measures listed above evident.  The number of households reporting an enforced lack of a private car fell five percentage points over the decade (13 per cent to 8 per cent).  The number of household reporting an inability to keep home adequately warm rose five percentage points (3.2 per cent to 8.5 per cent) with all of the increase happening since 2008.

Here is the same chart showing the averages for the EU15 (data for 2003 and 2004 are not available which the 2013 figures are estimates).

The large increases in households in arrears, being unable to face unexpected expenses or afford a one-week holiday away from home as evident in Ireland are not seen in the EU15 data.  It is these items that is driving the difference between Irish and EU15 deprivations rates in recent years.