June figures show how volatile goods exports can be – Davy
Goods exports fell in June, but this does not imply any slowdown in real economic activity, according to new analysis from Davy Stockbrokers.
Last week’s figures from the Central Statistics Office show that on a monthly basis, the value of exports fell sharply in June, down 26.3% from May as exports to the US slowed significantly.
The CSO said that exports of goods to the US sank by 59.6% in June to €4.4 billion compared with €10.8 billion in May.
According to Davy’s chief economist Kevin Timoney, some decline would have been reasonable to expect at some stage over the next few months.
“In January to May, the top three categories of pharmaceutials were up about 158% year on year, so this kind of swing in the other direction was bound to happen at some point,” said Mr Timoney
“What it emphasises is how volatile exports can be, goods exports especially, and how they’re not necessarily a particularly strong barometer of real economic activity,” he stated.
He said there are limits to these data for understanding the real Irish economy, noting that the second quarter’s increase in employee payrolls growth is an important counterpoint.
“We saw payrolls data from tax records on Friday and for the second quarter it looks like they were up about 2.5% year on year – that gives you the real economy versus goods exports’ very volatile picture, we don’t really see that in the real economic data so far this year,” he added.
In terms of how Irish-US trade could change over the coming years as a result of tariffs, Mr Timoney cautioned this is extremely difficult to forecast.
Rather than US tariffs or government policies, he believes a more important driver of Irish pharmaceuticals exports is arguably the technological advances made by large firms with a presence in Ireland.
“I think there are reasons to be hopeful about what the pharmaceuticals industry can produce over the next few years and I expect Ireland will be well placed to benefit from that because the key point is that Ireland’s exports to the US, while they’re a major market for sure, the rest of the world is a larger market again and arguably a faster growing one as well, most likely over the next few years,” he said.
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