13/7/2014: Ireland v Spain: Property Markets Signal Fundamentals-Linked Growth Potential

Two charts showing why Ireland can expect more robust correction in the property prices post-crisis trough:

First, investment in new construction:

The above shows that Irish construction investment dropped more significantly than in the case of (relatively comparable) Spain. This implies that we have been facing longer and deeper reductions in new stock additions than Spain, implying greater pressures on new supply.

Second, House Price to Income ratios (ignore caption):

Irish property prices have fallen more relative to income than Spanish prices. Which implies that penned up demand is greater in Ireland.

So there you have it, two (not all, of course) fundamentals driving prices recovery up in Ireland and both have little to do with the potential bubble dynamics.

Note: above charts are from IMF's Article IV Consultation Paper for Spain.

13/7/2014: Deflating That Corporate Debt Deflation Myth

This week, the IMF sketched out priorities for getting Spanish economy back onto some sort of a growth path. These, as in previous documents addressed to Irish and Portuguese policymakers, included dealing with restructuring of the corporate debts. IMF, to their credit, have been at the forefront of recognising that the Government debt is not the only crisis we are facing and that household debt and corporate debt also matter. As a reminder, Irish Government did diddly-nothing on both of these until IMF waltzed into Dublin.

But just how severe is the crisis we face (alongside with Spanish and Portuguese economies) when it comes to the size of the pre-crisis non-financial corporate debt pile, and how much of this debt pile has been deflated since the bottom of the crisis?

A handy chart from the IMF:

The right hand side of the chart compares current crisis to previous historical crises: Japan 1989-97; UK 1990-96; Austria 1988-96; Finland 1993-96; Norway 1999-05; Sweden 1991-1994.

So:

• Irish corporate debt crisis is off-the-scale compared to other 'peripherals' in the current crisis and compared to all recent historical debt crises;
• Irish deflation of debt through Q3 2013 is far from remarkable (although more dramatic than in Spain and Portugal) despite Nama taking a lion's share of the development & property investment debts off the banks.

Now, remember the popular tosh about 'debt doesn't matter for growth' that floated around the media last year in the wake of the Reinhart-Rogoff errors controversy? Sure, it does not... yes... except... IMF shows growth experience in two of the above historical episodes:

First the 'bad' case of Japan:

 So no, Japan has not recovered...

And then the 'good' case of Sweden:

Err... ok, neither did Sweden fully recover... for a while... for over a decade.

13/7/2014: A Miracle of Reformed Banks Operating Costs Performance

We are all familiar with the fact that Irish banks are aggressively deleveraging and beefing up their profit margins. This much has been set out in regulatory and policy provisions (e.g. PCARs) and lauded by the Irish policymakers as a sign of improvements in the banking sector. Alas, the same cannot be said about operating costs in Irish banks. This metric, in fact, has not been given much attention in Irish media and by Irish politicians. So in their place, here's the latest from the IMF (special note on Spain published this week):

Wait... what?! Irish banks cost-to-income ratio is hanging around 80%, well ahead of all other 'peripherals'. Is the Irish economy (borrowers) sustaining excessive costs and employment levels in Irish banks? Why, yes, it appears so... 

11/7/2014: BlackRock Institute Survey: EMEA, July 2014

BlackRock Investment Institute released its latest Economic Cycle Survey for EMEA region.

Per BII: "With caveat on the depth of country-level responses, which can differ widely, this month’s EMEA Economic Cycle Survey presented a mixed outlook for the region.

The consensus of respondents describe Russia, the Ukraine and Croatia be in a recessionary state, with an even  split of economists gauging Kazakhstan and South Africa to be a in a recessionary or contraction. Over the next two quarters, the consensus shifts toward expansion for Kazakhstan and South Africa.

Note: Red dot represents Czech Republic, Hungary, Romania, Israel, Slovenia, Poland and Slovakia

At the 12 month horizon, the consensus expecting all EMEA countries to strengthen or remain the same with the exception of Russia, Kazakhstan, Turkey, Hungary and the Ukraine.

Globally, respondents remain positive on the global growth cycle with a net 85% of 34 respondents expecting a  strengthening world economy over the next 12 months – an 14% increase from the net 71% figure last month. The consensus of economists project mid-cycle expansion over the next 6 months for the global economy."

Note: these views reflect opinions of survey respondents, not that of the BlackRock Investment Institute. Also note: cover of countries is relatively uneven, with some countries being assessed by a relatively small number of experts.

11/7/2014: Notes on German ESM vote

Here are some of my briefing notes on last night's programme on TV3 covering the latest 'seismic' news on retroactive banks recapitalisations and ESM.


Eurogroup meeting on 20th June 2013 agreed on the main features of the European Stability Mechanism's (ESM) Direct Recapitalisation Instrument (DRI).  I covered the fallout from that meeting here  and here  and here.

Note in the first post above, there is a link to Irish Government-set target of 17% of GDP for retroactive recapitalisation.

• The objective of the ESM's DRI will be to preserve the financial stability of the euro area as a whole and of its Member States in line with Article 3 of the ESM Treaty, and to help remove the risk of contagion from the financial sector to the sovereign by allowing the recapitalisation of institutions directly.
• This does not decouple banking sector from the sovereign, but weakens the links.
• There is a specific provision included in the main features of the DRI, which states: "The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement."

So do note: it is 'potential' (not assured access) and it is to be decided on case-by-case basis (so no 'symmetric' or 'equal' treatment) and it is 'mutual agreement' (allowing states to block any potential case-by-case deal). There is so much conditionality around this statement, one has to view it as being aspiration rather than prescriptive.

But, on a positive side, June 2013 agreement kept open the possibility to apply to the ESM for a retrospective direct recapitalisation of the Irish banks. I covered this here and the fallout from the second round deal here. The last link covers persistent opposition from Germany to retroactive recapitalisations. And if you thought this has gone away, here's the latest on that.

On June 10, 2014 the euro area member states reached a preliminary agreement on the operational framework for the ESM's direct recapitalisation instrument, DRI.

• This framework does not guarantee that we will get our case approved.
• It does not stipulate how retrospective recapitalization can take place (crucial detail).
• It requires unanimous vote of ESM board of governors (which is basically Council of Ministers).

All of this was forthcoming. See my article from March 2014 on this here.

The above is also confirmed by Minister Noonan on July 3 in the Dail. Minister further stated that: "However, it will not be possible to make a formal application to the ESM for retrospective recapitalisation before the instrument is in place. It would, therefore, be premature to make any submission, be it a technical paper or otherwise, in advance of the instrument being in place."

Incidentally, Minister Noonan's pronouncements on the topic have by now converged to repeating the same statement on every occasion. compare this and this.

So a reminder: After June 2012 summit, Minister Noonan went onto "Today with Seán O'Rourke", and said he expected the retrospective recapitalization agreement to be concluded by November 2012. Now, we are looking at the earliest possible application date or application consideration date of November 2014. But even this application date is uncertain. Methodology for valuation or even structuring recapitalisations is uncertain. In the mean time, we are getting less and less certain if it makes any sense for us to even apply for this measure.

Minister Noonan on the topic again: "When one thinks through the recapitalisation retroactive option, it was always envisaged that there would be some form of exchange of shares in the banks for capital upfront, and that this capital would be used to reduce the debt. While the technical work has been done on it, there is a question of value, price and judgment in all these matters. I certainly do not wish to talk ourselves into a position where just as the banks are becoming valuable, we give them away for the second time." This was stated on July 3 this year in the Dail.

Meanwhile, Bank of Ireland shares we hold have already yielded returns that are EUR1 billion in excess of original recapitalization, excluding the cost of the Bank of Ireland-related measures to the Exchequer via higher borrowing costs in 2009-2013 period.

Value of AIB currently is around EUR11 billion, value of PTSB is virtually nil, which is less than ca EUR23.5 billion we put into the bank and PTSB.

Our borrowing costs are low, and are lower than those of other peripheral states - why would they approve a recapitalization for Ireland? See, for example, most recent pressure points on borrowing costs here.

Another pesky issue: ESM is EUR500 billion fund. But only EUR60 billion is set aside to cover all future and any potential retrospective recapitalisations of banks. Eurostat estimates Irish Government banks stake at EUR16 billion in terms of its future potential value, which means that Ireland's retroactive recapitalization will either have to be so small as to make no difference to us, or so large as to swallow some 20% or so of the entire DRI fund.

Do we seriously expect to get anything substantial from the ESM?

Let us remember that until June 2013, Germany resisted not only retroactive recapitalisations, but even forward recapitalisations. The reason German leadership changed its mind is that EU has substantially reduced any potential exposure of ESM to such recaps in the future and loaded more, not less, burden onto national banks and sovereigns. These are covered here and here.

In short, the latest news from Berlin are not a 'step forward toward retroactive recapitalisations of the Irish banks' - at the very best these are simply re-affirmations of the already taken steps and the muddle they left behind.

Meanwhile, there are 3 major points of pressure relating to Irish banks:

1. Recaps we put in are weighing on our debt levels: 25.3 billion against 13-14bn value. There is little we can hope to get from the ESM in this context.
2. Government bonds from Promo Notes conversion: 25 billion against nothing. There is nothing in the ESM that allows us to swap these bonds for anything that is cheaper. Instead, the real impact can be achieved by significantly delaying sales of these bonds to private markets, which is not related to the ESM but is rather an ECB action.
3. State of banks balance sheets - arrears and tracker mortgages (EUR36 billion in AIB and PTSB). Professor Karl Whelan has an excellent note on trackers here.

11/7/2014: My comment on Greek and Portuguese bonds pressures

Portugal's Expresso on Greek and Portuguese bond yields with my comment: here.

My full comment in English:

In my view, we are seeing a strong reaction by the markets to adverse news relating to some peripheral euro area countries. 

In the Greek case, much of the rise in bond yields can be attributed first to the persistent uncertainty over the deficit adjustments and the progression of the reforms. The most recent suggestions by some analysts that Greece may require additional EUR2-3 billion over 2015-2016 relating to the news that the country pension fund is now facing an annual EUR2 billion funding gap have triggered some pressure on the country sovereign debt. This was compounded by thin and nervous markets for today's issuance of EUR1.5 billion bond which originally attracted just over 2.0x cover, but saw final demand slump somewhat on generally negative sentiment in the markets. Today's bond was priced at a yield of 3.5% with guidance between 3.5% and 3.625% issued two days ago on Tuesday. This is below the April 2014 5-year bond issue - the issue that attracted EUR20 billion worth of bids and was priced at 4.95%. However, shortly after the issue, secondary markets yields on April bond shot up to 5.10%.

In Portugal's case, the core risk trigger so far has been building up of pressures in the banking sector, and in particular in relation to Espirito Santo International announcement on Tuesday. This pushed Portuguese yields above 4% for 10 year bonds in today's trading. 

Portuguese risks have also put a stop to Banco Popular Espanol contingent convertible bond issue, as well as Spanish construction company ACS plans for an issue.

All in, Greek 10 year bonds closed at 502.0 spread to 10 year German bund up 20.4 bps on yesterday, Portugal's at 276.2 up 22.3 bps, Spanish at 161.8 up 9.2 bps, Italian at 174.1 up 9.3 bps, and Irish at 112.7, up 4.4 bps.

Spreads on 10 year German Bund:

The markets instability is a reminder that while current monetary and investment climates remain supportive of lower yields, markets are starting to show increasing propensity to react strongly to negative newsflows. Investors' view of the 'peripheral' states as being strongly correlated in their performance remains in place, especially for Spanish, Portuguese and Greek sovereigns and corporate issuers. 

The markets are jittery and are getting trigger-happy on sell signals as strong rises in bond prices in recent months have resulted in sovereign and corporate debt being over-bought by the investors. These investors are now staring into the prospect of gradual uplift in US and UK interest rates, weakening of the euro and thus rising cost of carry trades into the European sovereign bonds. At some point in time, these pressures are likely to translate into earlier investors in 'peripheral' bonds starting to exit their positions. 

We are not there yet, but market nervousness suggests that we are getting close to that inflection point.

7/7/2014: About those Global Growth Uplift Forecasts...

Last week, IMF updated its World Economic Outlook with a fresh upgrade to global growth forecast for 2015. Lot's of media miles have been travelled over this upgrade (here's one example). And, in fairness, the IMF might be right: there has been some firming up in global growth in recent months.

More significantly, the firming up is coming on foot of stronger performance of the advanced economies, where the cycle is now clearly indicating early stages recovery.

The same positive momentum has been confirmed in a number of expert surveys, e.g. BlackRock Investment Institute and McKinsey Global Institute and so on.

Still, just to be on the safer side, it is worth taking IMF forecasts in perspective. The Fund has been systematically wrong in its outlooks for Global and Advanced economies growth in recent years. Here is some evidence.

First: take the same period estimates (April-published estimates for the same year growth). These should be pretty easy to predict, as by the date of their release, the Fund has contemporaneous data flows on the economies (e.g. PMIs) and previous year dynamics pretty much sorted. Table below shows that, despite some data already being available, the Fund has rather varied experience with its estimates. And when it comes to the World Economy estimates, things have goo ten worse over the last three years, compared to the 5 years range.

Second, let's look at one year-ahead forecasts. Here, things are better in most recent three years, but they are not brilliant, especially when it comes to the Fund forecasts for the Euro Area. 3-5 year average over-estimate of growth is to the tune of 0.76-1.05% per annum. When it comes to World growth forecasts, these too turn out to be too optimistic, in the range of 0.56-0.60% annually.

Third: over two years forecasts, Fund's performance is worse: for the World economy forecasts tend to be on average more optimistic than the outrun by between 0.68% and 1.04% per annum. The same range for Euro Area is 1.19% to 1.53%.

Two charts illustrate the above. First: One-year ahead forecasts compared to outrun:

Next: 2008-2012 forecasts and 2013 (April) estimate for growth in 2013 compared to actual outrun:

Someone criticised my choice of the period covered, but the entire point of my argument here is not that the IMF is bad at forecasting (it is no worse than many other sources), but that forecasts at the times we live in are by their nature highly restrictive. That is, of course, not the notion one gets from reading business media reports of every IMF (or other major source) forecasts update.

So the net conclusion must be that there are indicators of global growth firming up… but I would't be rushing to buy on foot of IMF statements about 2015… At least not until there is a clear and established trend along which the forecasters can glide smoothly. When we need forecasts most, they are least useful… such is reality.

7/7/2014: Bitcoin: Swiss View vs EBA View

Three interesting links relating to Bitcoin:

1. Swiss authorities position on Bitcoin: http://leaprate.com/2014/06/23470/switzerlands-finma-grants-first-bitcoin-trader-license-to-sebx-deems-bitcoin-a-means-of-payment/
2. Swiss market view as contrasted by the EU view: http://leaprate.com/2014/07/23926/eu-opposes-switzerland-and-hits-bitcoin-instructs-banks-to-avoid-the-virtual-currency/
3. EBA position paper: http://www.eba.europa.eu/documents/10180/657547/EBA-Op-2014-08+Opinion+on+Virtual+Currencies.pdf (see page 22 for summary of identified risks)

4/7/2014: Fourth of July WLASze

This is WLASze: Weekend Links to Arts, Sciences and zero economics and in spirit of the 4th of July Day one hell of a 'Happy Birthday, America' webcards from deezen:
http://www.dezeen.com/2014/07/04/five-favourite-dezeen-american-architecture-projects-2014-4th-july/

My personal favourite: http://www.dezeen.com/2014/01/16/the-pierre-concrete-house-olson-kundig-architects/

And a bit of brilliant history of the Day when "treason was preferable to discomfort"... http://www.wired.com/2014/07/celebrate-the-4th-of-july-because-horse-flies/ Say, Thanks, America, to Tabanus Atratus, for the hotdogs and the fireworks and the football games in the parks... for the 4th of July:

Via http://www.wired.com/2014/07/celebrate-the-4th-of-july-because-horse-flies/

4/7/2014: Q1 2014: Domestic Demand dynamics

In the previous posts I covered the revisions to our GDP and GNP introduced by the CSO, top-level GDP and GNP growth dynamics, and sectoral decomposition of GDP.  These provided:

1. Some caveats to reading into the new data 
2. That the GDP has been trending flat between Q2-Q3 2008 and Q1 2014, while the uplift from the recession period trough in Q4 2009 being much more anaemic than in any period between 1997 and 2007. The good news: in Q1 2014, rates of growth in both GDP and GNP were above their respective averages for post-Q3 2010 period. Bad news: these are still below the Q1 2001-Q4 2007 averages.
3. Evidence that in Q1 2014, four out of five sectors of the economy posted increases in activity y/y. 

Now, let's consider Domestic Demand data. In the past I have argued (including based on econometric evidence) that Domestic Demand dynamics are most closely (of all aggregates) track our economy's actual dynamics, as these control for activities of the MNCs that are not domestically-anchored (in other words, they include effects of MNCs activities on Exchequer and households, but exclude their activities relating to sales abroad and expatriation of profits and tax optimisation).

Of the components of Domestic Demand:

• Personal Consumption Expenditure on Goods and Services stood at EUR19.915 billion in Q1 2014, which is up EUR42 million (yes, you do need a microscope to spot this - it is a rise of just 0.21% y/y. Good news is that this is the first quarter of increases in Consumption Expenditure after four consecutive quarters of decreases. Previously we had a EUR125 million drop in Personal Consumption Expenditure in Q4 2013 compared to Q4 2012.
• Net Current Government Expenditure stood at EUR6.614 billion in Q1 2014 which is EUR167 billion up on Q1 2013 (+2.59% y/y) and marks third consecutive y/y increase in the series.  Over the last 6 months, Personal Consumption fell by a cumulative EUR83 million and Government Net Current Expenditure rose EUR617 million. Austerity seems to be hitting households more than public sector?..
• Gross Domestic Fixed Capital Formation (basically an imperfect proxy for investment) registered at EUR6.864 billion in Q1 2014, up EUR191 million y/y. Which sounds pretty good (a 2.86% rise y/y in Q1 2014) unless one recalls that in Q4 2013 this dropped 11.35% y/y. Over the last 6 months Fixed Capital Formation is down EUR798 million y/y in a sign that hardly confirms the heroic claims of scores of foreign and irish investors flocking to buy assets here.
• Exports of Goods and Services, per QNA data, stood at EUR47.164 billion in Q1 1014, up strongly +7.41% y/y, the fastest rate of y/y growth since Q1 2011 and marking fourth consecutive quarter of growth. I will cover exports data in a separate post, as there is some strange problem with QNA data appearing here.
• Imports of Goods and Services were up too, rising to EUR37.635 billion a y/y increase of EUR2.086 billion.  
• Over the last 6 months, cumulatively, y/y Exports rose EUR4.970 billion and Imports rose EUR3.741 billion.
• Total domestic demand (sum of Personal Expenditure, Government Current Expenditure, Gross Fixed Capital Formation and Value of Physical Changes in Stocks in the economy) stood at EUR33.828 billion. This represents a y/y increase of just EUR335 million or 1.0%. This is the first quarter we recorded an increase since Q4 2013 saw a y/y drop in Total Domestic Demand of 3.83%. Over the last 6 months, cumulatively, Irish domestic economy was down EUR1.087 billion compared to the same 6 months period a year before.

The above are illustrated in the two charts below:

Lastly, let's take a look at nominal data, representing what we actually have in our pockets without adjusting for inflation. Over Q1 2014, nominal total demand rose by EUR499 million y/y, while over the last 6 months it is down EUR570 million y/y. So in effect all the growth in Q1 2014 did not cover even half the decline recorded in Q4 2013. One step forward after two steps back?..

Chart below summarises nominal changes over the last 6 months and 12 months.

4/7/2014: Q1 2014: GDP & GNP dynamics

In the previous posts I covered the revisions to our GDP and GNP introduced by the CSO and sectoral decomposition of GDP. The former sets out some caveats to reading into the new data and the latter shows that in Q1 2014, four out of five sectors of the economy posted increases in activity y/y. These are good numbers.

Now, let's consider GDP and GNP data at the aggregate levels.

First y/y comparatives based on Not Seasonally-Adjusted data:

• GDP in constant prices came in at EUR44.445 billion in Q1  2014, which marks an increase of 4.14% y/y and the reversal of Q4 2013 y/y decline of 1.15%. 6mo average rate of growth (y/y) in GDP is now at 1.49% and 12mo average is at 1.14%. Over the last 12 months through Q1 2014, GDP expanded by a cumulative 1.13% compared to 12 months through Q1 2013.
• Net Factor Income outflows from Ireland accelerated from EUR7.013 billion in Q1 2013 to EUR7.584 billion. Given the lack of global capes, this suggests that MNCs are booking more profit out of Ireland based on actual activity uplift here, rather than on transfers of previously booked profits. But that is a speculative conjecture. Still, rate of profits expatriation out of Ireland is lower in Q1 2014 than in Q1 2012, Q1 2011 and Q1 2010, which means that MNCs are still parking large amounts of retained profits here. When these are going to flow to overseas investment opportunities (e.g. if, say, Emerging Markets investment outlook improves in time, there will be bigger holes in irish national accounts).
• GNP in content prices stood at EUR36.861 billion in Q1 2014, up 3.35% y/y and broadly in line with the average growth rate over the last three quarters. This marks the third consecutive quarter of growth in GNP. Over the last 6 months, GNP expanded by 2.98% on average and cumulative growth over the last 12 months compared to same period a year before is 2.67%.

Two charts to illustrate:

The above clearly shows that the GDP has been trending flat between Q2-Q3 2008 and Q1 2014, while the uplift from the recession period trough in Q4 2009 has been much more anaemic than in any period between 1997 and 2007.

The good news is that in Q1 2014, rates of growth in both GDP and GNP were above their respective averages for post-Q3 2010 period. Bad news is that these are still below the Q1 2001-Q4 2007 averages.

GNP/GDP gap has worsened in Q1 2014 to 17.1% from 16.4% in Q1 2013. The same happened to the private sector GNP/GDP gap which increased from 18.3% in Q1 2013 to 19.1% in Q1 2014. This implies that official statistics, based on GDP figures more severely over-estimate actual economic activity in Ireland in Q1 this year, compared to Q1 last.

Chart to illustrate:

Switching to Seasonally-Adjusted data for q/q comparatives:

• GDP in constant prices terms grew by 2.67% q/q in Q1 2014, reversing a 0.08% decline in Q4 2013 and marking the first quarter of expansion. 6mo average growth rate q/q in GDP is now at 1.30% and 12mo at 1.26%. 
• GNP in constant prices terms grew by 0.48% q/q in Q1 2014, a major slowdown on 2.24% growth in Q4 2013. Q1 2014 marked the third quarter of expansion, albeit at vastly slower rate of growth compared to both Q3 2013 and Q4 2013. 6mo average growth rate q/q in GNP is now at 1.36% and 12mo at 1.34%. 

Chart to illustrate:

Finally, let's re-time recessions post-revisions.

Red bars mark cases of consecutive two (or more) quarters of negative q/q growth in GDP and GNP:

4/7/2014: Q1 2014: Sectoral Growth Decomposition

In the previous post I covered the revisions to our GDP and GNP introduced by the CSO. Setting the caveats set out in this discussion aside, what are the core underlying dynamics in the National Accounts?

Let's deal with sectoral distribution of output, expressed in constant factor cost terms:

• Agriculture, forestry & fishing sector output registered EUR1.042 billion in Q1 2014, which is up 11.2% on Q1 2013. Pricing effects contribute to the improvement which is now running at double digits y/y for three quarters consecutively. Compared to Q1 2011, output in this sector is up 15.3%, although activity remains below 2006-2007 average (some -6.5% lower).
• Industry output is at EUR11.462 billion, which is 2.1% ahead of Q1 2013. This marks first quarter of increases and the pace of expansion is not exactly fast. Compared to Q1 2011 output in the Industry is up only 2.9% and compared to @006-2007 average it is down 9%.
• Distribution, Transport, Software and Communication sector activity is at EUR9.775 billion in Q1 2014, up 8.0% y/y, marking the first quarter of increases after four consecutive quarters of y/y declines. The sector is down 2.5% on Q1 2011 and is -7.8% below 2006-2007 average.
• Public Administration and Defence sector activity is at EUR1.495 billion in Q1 2014, down 2.0% y/y for 21st consecutive quarter of y/y decreases. The sector is now down 7% on Q1 2011 and 16.6% below activity in 2006-2007.
• Other Services (including Rents) are up at EUR17.064 in Q1 2014, a rise of 3.9% y/y and marking 12th consecutive quarter of increases. Sector activity is now up 11% on Q1 2011 and is up 10.2% on 2006-2007 levels. All of this is down to MNCs operating in ICT services sector and much of the increase on 2006-2007 levels is accounted for by tax optimisation, not by real activity.
• Within Industry, Building & Construction sub-sector posted EUR0.719 worth of activity in Q1 2014, which is 7.6% ahead of Q1 2013, marking a slowdown in the rate of growth from Q2-Q4 2013. The sub-sector now posted expansion over the last 6 consecutive quarters. Still, Q1 2014 activity is 4.8% behind Q1 2011 and is down 57.1% on 2006-2007 average.
• Also within Industry, Transportable Goods Industries and Utilities sub-sector activity registered at EUR10.744 billion in Q1 2014 - an increase of 1.8% y/y and the first quarter of expansion. The sub-sector activity is now up 3.4% on Q1 2011 and is basically unchanged on 2006-2007 average.

So in the nutshell, only two sectors activity is currently running at above 2006-2007 average levels: Other Services (aka ICT Services MNCs) and Transportable Goods Industries & Utilities. All other sectors are running below 2006-2007 levels.

Charts below illustrate y/y growth rates in the sectors: