Trade and Unemployment Stats

Trade meltdown
Our latest trade situation is dire (here).

Although “Seasonally adjusted imports fell by 11% in December relative to November
2008 and exports fell by 4%,” in monthly terms things were much worse: “Relative to October 2008, imports fell by 1% in November 2008 while exports fell by 4%.”

So the overall dynamic is that exports are now collapsing at a faster rate than the deterioration in imports.

The reason is simple – imports started to suffer on the back of a much deeper contraction in the economy and this process was exacerbated by the Government-induced pillaging of personal disposable incomes since July 2008 announcement concerning the upcoming Budget 2009 - the first time Messrs Cowen and Lenihan have dipped deeper into our pockets. Exports lagged this process because our main buyers were more resilient to the global economic downturn than we are, because their Governments largely were not so insane as to raise taxes amidst a recession, and because Ireland-based multinationals engaged in a massive exercise to rationalize their taxes – booking more transfer pricing (thus supporting both imports and exports) via Ireland Inc. The chart - taken from CSO's release - shows exactly this timing and trade balance dynamics...Evidence? “The January-November figures for 2008 when compared with those of 2007 show that: Exports decreased from €83,062m to €79,873m (-4%)” with
• Computer equipment exports decreased by 27% (exactly offsetting a 26% decrease in imports in this category, implying very aggressive transfer pricing by the likes of Dell and others),
• Organic chemicals by 10%,
• Vegetables and fruit by 42%,
• Industrial Machinery by 15% and Metalliferous ores by 21%.
• Chemical materials increased by 35%,
• Medical and pharmaceutical products by 12% (imports in this category were up 18%),
• Professional, scientific and controlling apparatus by 30% and
• Petroleum products by 41%.

There is little evidence in the aggregate numbers that Irish exporting companies are suffering from the Sterling devaluation: shipments of goods to Great Britain fell by 5%, while shipments to Switzerland decreased by 22%, the Netherlands by 16%, Germany by 10%, and the Philippines by 49%. Dollar devaluation is not biting either with shipments to the US up by 2%, although most of this is probably due to transfer pricing.

Despite stronger Euro, imports of goods from Great Britain decreased by 7%, China by 18%, the United States by 6%, Japan by 28%, South Korea by 39% and within the Eurozone – from France by 13%, and Germany by 15%. Goods imports from Denmark increased by 50%, the Netherlands by 6%, Poland by 65%, Russia by 73% and Finland by 33%.

Yieeeks!

Unemployment - the bust is getting bustier...
Per QNHS data, also released today (here):

Q4 2008 there were 86,900 or 4.1% fewer people working in Ireland – “the largest annual decrease in employment since the labour force survey was first undertaken in 1975. This compares with an annual decrease in employment of 1.2% in the previous quarter and growth of 3.2% in the year to the fourth quarter of 2007.” Desperate stuff…

The overall employment rate among persons aged 15-64 fell to 65.8% from 69.0% in Q4 2007 with current employment rate running at the level of H1 2004, effectively implying that the last 4.5 years worth of growth have gone up in smoke within a span of less than 1 year.

There were 170,600 persons unemployed in Q4 2008 - an increase of 69,600 (+68.9%) in the year. The total number of persons in the labour force in the fourth quarter of 2008 was 2,222,700 – a decrease of 17,200 or 0.8% over the year. “This is the first annual decline in the size of the labour force since 1989,” says CSO. It is safe to assume that these figures do not include an outflow of foreign and domestic workers from Ireland. Overall, jobs destruction is thus much deeper than the QNHS figures imply.

All age groups showed an increase in unemployment with those aged 25-44 showing the largest increase (+33,500). The latter effect is, of course, due to the idiotic labour laws that imply that for any company it is virtually impossible to lay off older workers. This, in turn, leads to a situation where the productivity of individual workers becomes irrelevant to the decision to lay them off or to keep them on a payroll. The long-term unemployment rate was 1.8% compared to a rate of 1.2% in Q4 2007. The standardized unemployment rate was 7.7% in Q4 2008, up from 6.4% in Q3.

Conclusion:
In a normal democracy, the Government would probably fall on figures like these, but whichever way you spin the figures – Mary Coughlan being the Minister in charge of both Trade and Employment should find some final remnants of grace and tender her resignation.


As a side note, consider figure below:
Per CSO: “There were an estimated 476,100 non-Irish nationals aged 15 years and over in the State in the fourth quarter of 2008. Of these 349,300 were in the labour force, a decrease of 5,400 in the year to Q4 2008. An increase of 49,700 had been recorded in the year to Q4 2007. According to ILO criteria, 316,000 non-Irish nationals were in employment, a decrease of 18,700 over the year. A further 33,300 were unemployed, an increase of 13,300 in the year to Q4 2008. Nationals of the EU accession states showed a decline in employment of 16,800 and an increase in unemployment of 7,500 over the year. The unemployment rate for non-Irish nationals was 9.5% compared with an unemployment rate of 7.3% for Irish nationals.

In the fourth quarter of 2008 non-Irish nationals accounted for over 15% of all persons aged 15 and over in employment. Over 34% of workers in Hotels and restaurants, 18.8% in Other production industries and 16.7% in Wholesale and retail trade sectors were non-Irish nationals. The largest decreases in employment for non-Irish nationals occurred in the Construction (-10,100), Hotels and restaurants (-7,400) and Wholesale and retail trade (-5,100) sectors.” Now, detailed tables in the release show that in fact virtually no foreigners were employed in the public sector (ex health and education) per chart below.

Foreign nationals employment, 1,000s.So the total decline in foreing workers in mployment numbers of 86,900 was fully accounted, per CSO Table A1 as becoming either Unemployed (69,600), or out of the Labour Force (17,200), while 48,500 were Economically Inactive. Any idea how many actually left our shores?