June Trade & Investment Report
Brian Cotter - Public Affairs Director
The latest IMD World Competitiveness Yearbook brings a welcome positive international spotlight onto Ireland's attractiveness for sustained investment. Having risen three places in the rankings from 20th to 17th in 2013 our firm return into the top 20 of this respected index shows a promising trajectory. In this latest report Ireland is ranked 3rd for the availability of skilled labour, 1st for the flexibility and adaptability of our workforce, 1st for attitudes to globalisation, and 1st for investment incentives. This is in keeping with how Ireland has ranked in recent years and it is very encouraging that we have remained strong in those key areas.
Ireland wants to become known as a ‘top ten' international performer, so there is no room for complacency. This is especially so given the publication of ‘Ireland's Competitiveness Performance 2013' by Forfás, while verifying much in the IMD report, their analysis suggests that the gains in cost competitiveness have not been evenly spread across the economy. Significantly, much of the gains have been driven by cyclical factors and the weakness of the Euro, rather than systemic reform driving productivity improvements across the economy.
We welcome news such as the IMD rankings as a reminder, not just of how Ireland has regained competitive strength, but also of how Ireland has further ground to make up and the importance of tending to our existing strengths while continuing to make improvements. The American Chamber's emphasis on tax competitiveness, access to talent and sustainable competitive advantage will remain in our engagements with policymakers and the media to ensure that our strengths are understood, promoted and protected. You can read more about the IMD & Forfás reports below.
Key Economic Indicators
Arrow Direction indicates direction of trend;arrow colour indicates whether trends are perceived as positive (Green) or negative (red).
(f) = forecast
All Irish figures sourced from Central Bank of Ireland Quarterly Bulletin
Exports strengthen in challenging trade environment
According to the CSO, a seasonally adjusted increase in goods exports of €272m (or 4%) was recorded in March on the previous month. The value of goods exports stood at €7.3b in March, down from €7.9n in March 2012. In the first three months of 2013 exports of chemical and pharmaceutical products fell by more than 11% on the same period in 2012. Despite the fall, chemicals and pharmaceuticals remain by far the largest single goods export category, accounting for 60% of the total in the first three months of the year. The US accounted for 26% of Ireland's exports in that three month period.
Sources: CSO, The Irish Times
PMIs reflect global slowdown
The latest Investec Manufacturing Purchasing Manager's Index (PMI) remained in negative territory for the third consecutive month in May, registering 49.7. The pace of decline was, however, at its slowest since falling below the 50 mark in March and appears to reflect a positive upward trend. Meanwhile the Services PMI continued to grow in May, albeit at a slower pace. The Index registered 52.7, a reduction from April's 55.2. While new orders overall increased at a slower pace in May, the PMI sub-index measuring new export business at services companies rose to 56.5 in May from 54.6 a month earlier, extending the current run of growth to 22 months.
Sources: Investec, The Irish Times
Ireland improves in world competitiveness rankings
Ireland has jumped to 17th in the 2013 IMD World Competitiveness Yearbook rankings, up from 20th in 2012, and ahead of the UK, Israel and Finland. In further positive news Ireland was ranked 3rd in the world for the availability of skilled labour, 1st for the flexibility and adaptability of our workforce, 1st for attitudes to globalisation, and 1st for investment incentives. Over half the executives surveyed for the report recognised a competitive tax system, skilled workforce, business friendly environment, and high educational levels as key attractive factors for Ireland.
The USA has regained top spot in the rankings with last year's No. 1, Hong Kong, dropping to 3rd, while Switzerland rose one place to 2nd overall. The IMD Yearbook is a leading indicator of the competitiveness of economies around the world and is highly regarded by businesses and policymakers. You can see the rankings here.
Forfás note competitiveness improvements but caution on persistent high costs
The latest assessment by Forfás of Ireland's competitiveness brings into focus the competitive improvements made in recent years and the need for vigilance in maintaining those gains. The report, Ireland's Competitiveness Performance 2013, notes that Ireland has had considerable success in reducing a range of costs since 2009, particularly in relation to property costs and a range of business services. Unit labour costs have also fallen in Ireland, although this is partly due to a restructuring of the economy away from less productive sectors. While consumer prices in Ireland have been rising at a much lower rate than the euro area average, Ireland is still the 7th most expensive country in the euro area.
The report states that "Ireland's productivity performance has improved considerably in recent years, with growth rates well above the OECD average. However, much of this improvement arose from changes in the composition of employment in Ireland during the recession rather than broad based productivity growth. To ensure future productivity growth is sustainable it will be important to provide a supportive environment for investment in high growth sectors which will have the dual effect of both increasing productivity and expanding employment." You can read the report here.
Consumer sentiment improves
The overall KBC Ireland/ESRI Consumer Sentiment Index increased to 61.2, from 58.9 in April. The 3-month moving average was broadly unchanged, increasing from 59.4 to 60.0. The average for the year to date is 60.7, higher than 59.5 for the same period last year. In turn the Index registered 61 in May 2012. Austin Hughes of KBC Ireland commented that "a broadly stable sentiment reading for May suggests Irish consumers remain cautious. While they may read or hear of an improvement in some economic indicators, this hasn't translated into more meaningful measures such as their own financial situation. At the margin, the cut in ECB interest rates and low Irish inflation helped sentiment in May but Irish consumers still lack any ‘feel-good' factor along the lines hinted at in recent US and German consumer confidence data."
Source: KBC Ireland/ESRI
Ireland's attractiveness for FDI continues to improve
Ernst & Young's European Attractiveness Survey 2013 has underlined the fact that Ireland had its best year for FDI projects in a decade in 2012. The survey found that Ireland proved the ninth most attractive country in Europe in 2012, both in terms of FDI projects (123, up 16%) and jobs created (8,898 jobs, up 65.6%). The Dublin region also recorded a 20% increase in FDI projects over 2011 with the 7th highest number of projects among urban regions.
The UK was the highest ranked country, followed by Germany, France and Spain. In Western Europe, Switzerland, the Netherlands, Italy and France saw inbound projects decline. But countries with increasing success in attracting projects, included Spain, Finland, Ireland and Belgium. You can read the report here.
Source: Ernst & Young
10Gen, the developer behind the high-performance, open source, document database ‘MongoDB', have officially opened their EMEA headquarters in Dublin. The company have launched a recruitment campaign for positions in Engineering, Sales, HR, Legal and Finance. Demand for MongoDB skills is the second fastest growing of all skills worldwide, according to Indeed.com. 10gen was listed as one of the top 10 start-ups by the Wall Street Journal.
Prometric, a leading provider of technology-enabled testing and assessment recently reached a milestone of 100 jobs in its Dundalk operation seeking 24 additional ICT roles. The company are recruiting for software developers, system analysts and quality control specialists.