The CSO have released their Quarter 1 2010 Household Travel Survey (involving an overnight stay).  Domestic trips have increased slightly on Q1 2009, but are down 3.5% on Q1 2008.  The value of those trips is down 22% on Q1 2008.  In terms of international trips, the total number of trips is down 18% on Q1 2008 and the expenditure on the remaining trips is down 35%.  Not unsurprisingly, given the recession, people are travelling less and spending less.  On the domestic front, holiday trips have declined slightly, but visiting friends and relatives were up 5% on Q1 2009.   As regards international travel, Irish residents spent 9,527,000 nights on foreign trips in Q1 2010, 6% less than Q1 2009 and 23.3% down on Q1 2008.   For those interested, the report contains a range of information on destinations, types of accommodation, number of nights stayed, how trips were booked, mode of transport, etc.

Q1 2010 travel survey headline figures

The CSO has also released today the Q2 2010 Production in Building and Construction Index.  It shows that the woes of the construction industry are continuing in 2010, with the volume of production decreasing by 32.8% between Q2 2009 and Q2 2010, and the value of production decreasing by 31.8% in the same period.  Declines in value were 41% in residential building work, 36% for non-residential building work, and 21% in civil engineering between Q2 2009 and Q2010.

The residential market has been particularly badly hit, with the value of production index now just 12.8, and the volume of production index at 11.3 (against a 2005 base of 100), indicating that house building has largely contracted to one-off properties, with few larger developments progressing.

To put things in context, I’ve plotted the change over time from 2000-2010 using the CSO data (available from here).  In both value and volume there was steady growth in the first half of the decade, then a short period of slowdown, then rapid decline. The graphs show little sign of slow down in the decline.  The all buildings and construction value index has declined70.1% from Q2 2006, with the residential value index declining by a massive 87.8%.  The non-residential value index peaked slightly later and has declined by 48.6% from Q2 2008, and the civil engineering value index has declined by 33.1% from Q2 2008.

Value of Production Index in Building and Construction (Seasonally Adjusted) (Base 2005=100), 2000-2010

Volume of Production Index in Building and Construction (Seasonally Adjusted) (Base 2005=100), 2000-2010

The CSO data also allows a European comparison.  Ireland had the second largest annual % decline between Q2 2009 and Q2 2010 at -33.1% only exceeded by Latvia at -35.3%.  It was trailed by Denmark at -23.2%, Bulgaria at -19.5%  and Greece at -18.3%.  Only six countries had growth over the same period, including Finland at 17.8%, UK at 10.1%, Sweden at 6% and Germany at 4%.

Given oversupply issues in both residential and office/retail sectors, building in these sectors has declined rapidly in value and volume as a market correction takes place and the wider economy seeks to recover.  And whilst civil engineering has managed to hold-up through capital projects, it too is now starting to decrease as the government cuts back on such projects.   In the short term, at least, given the fiscal crisis it is difficult to see any major turn around in present trends and the construction industry is likely to continue to suffer further job losses and companies going bust.

Rob Kitchin

The CSO released the Q2 external debt figures today. The headline figure is that Ireland’s external debt increased to €1.74 trillion at end-June 2010.

The CSO report that:  “At 30 June 2010, the gross external debt of all resident sectors (i.e. general government, the monetary authority, financial and non-financial corporations and households) amounted to €1,737bn. This represents an increase €63 bn in the stock of financial liabilities to non-residents (other than those arising from issues of Irish equities and derivatives contracts) compared to the level shown at the end of March 2010 (€1,674bn).”

I thought it might be interesting to see how external debt has altered since the quarterly data was first released in 2003, creating the following graph using the CSO data (available here also below).  Ireland’s external debt (including that not only of government but also financial institutions based here and in the real economy) has increased markedly over the period.  In terms of the state, total government debt has increased from €24.4bn in Q2 2003 to €80bn in Q2 2010, and monetary authority debt has increased from €5.6bn in Q2 2003 to €65.7bn in Q2 2010 (having been €103.5bn in Q2 2009 and €5.1bn in Q2 2008).  Clearly, a dominant factor in these two arenas is the fiscal crisis and the bank bailout.  The bottom line, whether it’s overall debt or state debt, is that external debt has grown enormously over the past 7 years, and is set to be a significant issue for the foreseeable future.

Ireland's external debt Q2 2003-2010

Ireland external debt Q2 2003-2010 raw figures

Rob Kitchin

That’s the conclusion of Retail Ireland, as reported in the Irish Times last week on the back of the CSO’s Retail Sales Index figures.  The CSO report that the volume of retail sales decreased by 14.1% in 2009 when compared to 2008 and decreased by 18.0% in value terms.  This was on top of a drop of volume of retail sales of 6.1% and in value of 4.5% in 2008 compared to 2007.  All retail sectors showed a decline with the most significant year on year fall in the motor trade with volume of sales down 15.1% (20.1% in value terms), with non-specialised stores (includes supermarkets) down 3.5% (9.2% in value terms).  All the indication from pundits is that the volume and value of retail sales will continue to fall in 2010, not unsurprisingly given the tightening of purse strings across the country as more and more people join the Live Register, the cuts to public sector take home pay, and most people becoming more cautious, saving rather than spending.

The worry is that we become firmly stuck in a deflationary spiral where as spending contracts, retailers and their suppliers come under pressure and start to let staff go or shut up shop, which then adds to the number of people tightening purse strings, which reduces demand and spend, and so the circle goes round.  Moreover, in this scenario it is likely that indigenous shops and producers will suffer the most, unable to compete with the bigger (overseas) chains who will potentially suck more capital out of the Irish economy.  Retail Ireland is seeking a 10%  rebate on commercial rates paid in 2009, a reduction in VAT for a specific period to stimulate sales, and government intervention in the rental market, service costs and labour rates.  This may seemingly help them in the short term, but what’s really needed is a shift to stimulate the wider economy and to create employment that will put money back in peoples’ pockets and will help breed consumer confidence to start spending again.