News Archives - Page 3 of 281 - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

Euro zone industrial output tumbles more than expected in December

Euro zone manufacturing output plunged more than expected in December ending a weak quarter for the single currency area, official estimates showed today. 

Industrial production fell 2.1% month-on-month in the euro zone, the EU statistics agency Eurostat said, in a slump that was worse than the 1.6% fall predicted by economists polled by Reuters. 

Year-on-year, output fell 4.1% – much more than market forecasts of a 2.3% drop. 

The negative monthly reading followed a 0.9% drop in October and a stalled production in November, which was revised down from the previously estimated 0.2% rise, as euro zone manufacturers were battered by global trade tensions. 

Production in December fell significantly in all major economies in the bloc, pointing to a possible downward revision of gross domestic product (GDP) growth for the last quarter. 

At the end of January, before the output data was known, Eurostat estimated the euro zone grew 0.1% in the last quarter. 

The December fall was driven by a 4.0% drop in the output of capital goods, which implies lower investment appetite among industry managers. 

Despite the bad end of the year, businesses were upbeat in January according to sentiment indicators released in past days, in a sign that abating trade tensions between the US and China may boost morale. 

The effects of the coronavirus outbreak remain, however, unclear.

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Economy operating close to full capacity – Central Bank

The Central Bank has said the economy is close to operating at full capacity and that any incoming government should follow a prudent fiscal policy and reduce the level of national debt.

In its Quarterly Bulletin, the bank also highlights how exports of Irish goods are becoming increasingly concentrated in pharmaceuticals and computer processors.

The economy has been given a breather.

The revised Withdrawal Agreement struck between the UK and the EU will ensure the economy will continue to grow strongly this year at a rate of 4.8%.

But after that, the bank forecasts the economy will take a hit depending on the scope of the future trade deal with the UK.

The bank has also published research which finds that 62% of Irish goods exports are concentrated in pharmaceuticals and that 40% of the growth in this sector can be accounted for by just one product category: immunology drugs.

Without this sector, growth in overall merchandise exports last year would have been flat.

Speaking at a briefing, the Bank’s Director of Economics and Statistics Mark Cassidy said the bank’s economic advice to any incoming government would be the same as it gave to the outgoing administration: – follow a prudent fiscal policy and reduce the level of public debt.

The Central Bank also revised up its forecast for gross domestic product growth for 2019, expecting data to confirm that the economy grew by 6.1% last year, above the 5% it had forecast in October. 

Expectations for GDP growth in 2020 and 2021 were also revised upwards to 4.8% and 4.2% compared to forecasts of 4.3% for 2020 and 3.9% for 2021 three months ago.

It said last year’s expansion was driven by exceptionally strong growth in the exports of pharmaceuticals and chemicals, which the bank expects to continue, masking slower growth in other export sectors experiencing relatively weak demand.

The forecasts are based on an assumption that a new post-Brexit EU-UK trade agreement is in place from January 2021.

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Number of apartments built last year jumps by 60% – CSO

The number of apartments built last year jumped by almost 60% compared to 2018, new figures from the Central Statistics Office show today.

The CSO said a total of 3,644 apartments were built last year, up 59.6% on the figure of 2,283 for 2018. 

When measured on a quarterly basis, the number of new apartments completed soared by over 72% in the fourth quarter of 2019 compared to the same three month period in 2018.

The number of new apartments rose from 726 in the same fourth quarter of 2018 to 1,250 in the fourth quarter of 2019 – an increase of 72.2%.

The CSO noted that over two-thirds (67.8%) of the new apartments completed in the last three months of 2019 were in Dublin. 

Overall, the CSO said a total of 6,450 new homes were completed in the fourth quarter of 2019 – a ten year high – and an increase of 18.5% on the 5,445 new homes in the fourth quarter of the previous year.

This brings the total number of new home completions for the whole of 2019 to 21,241, up 18.3% from 17,952 built in 2018.

Today’s figures show the number of scheme dwellings (a multi-unit development with two or more houses) rose from 3,364 to 3,811, an increase of 13.3%.

This takes the total scheme completions in 2019 to 12,529, a rise of 14.1% over the 10,985 scheme completions in 2018.

Meanwhile, single home builds grew by 2.5% between the fourth quarter of 2018 and the fourth quarter of 2019 – rising from 1,355 to 1,389. 

For the whole of last year, single completions moved 8.2% higher, from 4,684 to 5,068.

Today’s CSO figures also reveal that the average size of a new home fell by 6.1% in 2019 due to the increase in the proportion of completed homes being apartments and a decrease in the size of single and scheme houses. 

They also show that the number of previously finished dwellings in unfinished housing developments dropped by almost 38% from 306 in the fourth quarter of 2018 to 190 in the last quarter of 2019.

Commenting on the figures, Goodbody chief economist Dermot O’Leary said urban sprawl continued unabated towards the end of 2019, with completions in the Mid-East – Dublin’s commuter counties – growing by 24% in the fourth quarter to 1,554 units. 

This compares to the modest 3% uptick in Dublin in last three months of 2019, he added. 

Mr O’Leary said that despite the 60% surge in the number of apartments completed, they continue to represent the lowest percentage of new build in the EU.

He said the 3,644 apartments built last year represents just 17% of completions in 2019, relative to an EU average of 59%. 

He noted that of these units, the majority – 80% – are purchased by Private Rental Sector (PRS) investors. 

“There is also a significant amount of apartments in the planning and development process that will depend on the ongoing buoyancy of the PRS sector. This would be put under threat if some of the policy proposals of Sinn Féin were to be implemented if they were to find their way into power,” the economist added. 

The main source used for today’s CSO figures is the ESB domestic connections data, where the date that the connection is energised determines the date of completion. 

But the CSO said it is accepted that the ESB domestic connections data overestimate new homes and it has adjusted for this by using additional information from the ESB and other data sources. 

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Banks and property related stocks slump in Dublin trade

Shares on the Dublin market were lower today after Sinn Féin secured the highest percentage of the first preference vote in the weekend election. 

The ISEQ index closed down 1.2%.

The banks were all weaker with AIB end the day 5.4% lower, while Bank of Ireland sank 8.3% and Permanent TSB tumbled 11%.

Investors fear a negative impact from Sinn Fein’s policies, which include an end to tax breaks for banks.

“Sinn Fein’s manifesto contained a range of more radical policies on banking and housing,” Davy Research analyst Conall MacCoille said in a note to clients.

Property related stocks also took a hit with shares in housebuilder Glenveagh Properties dropping 10.9%, while I-RES REIT slumped 8.7%, Hibernia REIT lost 7% and Cairn Homes was down 8.6%.

Sinn Féin’s housing policies include abolishing the “Help-to-Buy” scheme and imposing a rent freeze.

With negotiations to form a coalition government taking place over the next few weeks, Conall MacCoille said however that Sinn Féin may end up compromising on some of these policies.

In a note, Goodbody Stockbrokers also said some of the more extreme anti-bank rhetoric in Sinn Féin’s manifesto is unlikely to see the light of day.

The party’s manifesto included such measures as retaining the State’s 71% interest in AIB and ensuring that decisions made at board level in the banks are made in the interest of borrowers and not shareholders. 

However, the policies likely to be most in focus in the days ahead include ending the corporation tax break for banks, increasing the bank levy from €150m to €200m and giving the Central Bank powers to cap mortgage rates and instruct the banks to lower rates, the stockbrokers added.

The stockbrokers also cautioned that share prices in the banking sector are likely to struggle in the days ahead.

Speaking on RTÉ’s Morning Ireland, KBC Bank Ireland’s chief economist Austin Hughes said the election result may weigh on sentiment in the short-term, though perhaps not by as much as it would in previous years.

“In general markets, businesses and consumers don’t like uncertainty but in recent years uncertainty has become a central feature of the global landscape,” he said.

“Whether you’re talking about political uncertainty across Europe that saw the rise of very radical parties and promises, or closer to home uncertainty around Brexit, by and large markets, businesses and consumers have tended to weather that problem.”

He said uncertainty was now seen as “part of the new normal”, with people tending to get on with whatever they were doing.

He said financial markets are likely to take a wait-and-see approach on Irish-linked investments, with the nature of the next government key to what will ultimately happen to stocks and bonds.

“They’ll wait to see what the scale and shape of fiscal policy will be like,” Mr Hughes said.

In recent months both the European Central Bank and the International Monetary Fund have called for some loosening of fiscal policies, which means a new government may have the flexibility to increase spending in certain areas.

Mr Hughes said that this could ultimately benefit Ireland’s image in the eyes of international markets.

“If they actually can make progress and deal in a fundamental way with problems like housing and health that impinge on the economy and broader Irish society that would be something that markets, consumers and businesses would be delighted about,” he said.

The risk, however, was that multiple parties compromise around a budget policy that gives everybody something small – but does not do enough to tackle the major issues in any meaningful way.

“We actually have quite an opportunity now because of the way the world economy is to address some of these issues with a coherent and consistent fiscal policy, so it’s really a case of whether the parties can be adult enough to actually focus on the measures rather than on their support base,” he said.

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Commercial sector boosts construction activity in January – PMI

Activity in the construction sector grew in January for the second month in a row, but the pace of growth slowed from December, a new survey shows. 

The latest Ulster Bank Construction Purchasing Managers Index showed a reading of 50.9 in January, above the 50 no-change mark again but down from 52 in December. 

Ulster Bank said today’s data suggested that the overall rise in activity was centred on a strong performance in the commercial category. 

It noted that activity on commercial projects increased markedly, and at the fastest pace since February 2019. 

But housing activity saw a modest reduction, while civil engineering activity decreased at the slowest pace in eight months.

Simon Barry, Ulster Bank’s chief economist, said companies reported particular strength in commercial activity where a third successive monthly increase saw its index pick up to an 11-month high. 

“This leaves growth in commercial projects running at a very solid pace above the long-run average for the survey which spans the past 20 years,” the economist said. 

But he said the January results on residential activity were on the “disappointing side”. 

“Following a bounce in December, the Housing PMI dipped back below 50 last month as respondents reported an early-year contraction in residential activity,” he said. 

“However, with leading indicators such as the housing commencements data continuing to point to further upside for housing output, we would be surprised if the Housing PMI doesn’t show some improvement in the months ahead,” Simon Barry said. 

Ulster Bank said a second consecutive strong improvement in the new orders index took the growth rate of new business to a seven-month high in January as reduced Brexit-related uncertainty was again cited as a support for the near-term outlook. 

There was also a further strengthening of optimism about the year ahead where sentiment rose to its highest level in 12 months. 

“Over 43% of respondents expect their activity to rise in 2020,  with firms citing strong pipelines of new work as a key support for the outlook for the coming year,” Ulster Bank said.

The increased new order volumes also led construction companies to expand their staffing levels again in January. This extended the current sequence of job creation to just under six and a half years. 

Ulster Bank also noted that the latest rise in employment was solid and the sharpest for seven months.

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Euro zone investor morale falls in February on coronavirus fears – Sentix

Investor morale in the euro zone fell for the first time in four months in February over fears that China will not be able to contain the coronavirus outbreak, a survey showed today. 

Sentix’s index for the euro zone fell to 5.2 from 7.6 in January. The Reuters consensus forecast was for a fall to 4.1. 

The slight drop reflects the fact that investors think the economic damage from the novel virus has been mostly limited to China, said Sentix chief Manfred Huebner.

The global economy was getting impetus from the US, he added.

“The outbreak of the coronavirus and the subsequent drastic measures taken by the Chinese government cast a shadow over the economic outlook,” Mr Huebner. “Fortunately, so far the effect is limited.” 

“However, in view of the significant declines in Chinese economic data, it is clear that the negative effect is likely to be much greater if it does not become apparent in the coming days that the spread of the virus has been taken away,” he added. 

Reflecting such fears, a sub-index measuring investor expectations in the euro zone fell to 6.5 from 9.8 in January.

While morale deteriorated in Asia and the euro zone, the picture was different in the US, which is showing resilience, the survey showed. 

The index for the world’s biggest economy rose to 20.3 from 15.9 in January, reaching its highest level since November 2018. 

Sentix surveyed 1,086 investors between February 6 and 8.

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House sales up in commuter counties

The sale of houses in commuter counties around Dublin increased by at least 5%, according to a study based on analysis of sales recorded in the Property Price Register.

Eight Leinster counties recorded increases of at least 5% in the number of sales compared with 2018.

The study, which was carried out by property website MyHome, shows that the number of sales nationwide was flat last year compared to the year before.

It also shows mixed results in major urban centres. There has been a fall in activity in Dublin, with the number of sales in the capital dipping by 2.2%, from 18,654 sales in 2018 to 18,247 sales in 2019.

In Cork, meanwhile, sales rose by 5.9%, from 6,085 sales in 2018 to 6,447 sales last year.

There was almost an even split in sales volume across the country, with 13 counties reporting a rise in figures, 10 counties experiencing drops and three counties staying flat.

The market was healthier with regard to the value of transactions, with just six counties across the country reporting a negative figure compared with 2018.

Dublin, which is responsible for almost a third of sales in the Irish property market, recorded 18,247 sales in 2019. The capital was followed by Cork with 6,447 sales, Kildare with 3,385, Galway with 2,730, Meath with 2,670 and Limerick with 2,146 making up the top six.

The counties with the lowest number of sales were Monaghan (385), Longford (449), and Leitrim (455).

Just over half of all money in the residential market changed hands in Dublin – €9.11 billion, followed by Cork on €1.7 billion and Kildare on €1.02 billion. The least – €52.9m – was spent in Leitrim.

The total value of national residential property transactions last year was approximately €1 billion higher than the previous year (up 6.3%). In total the value of residential property sales recorded during 2019 was €17.88 billion, compared with €16.84 billion in 2018.

Angela Keegan, Managing Director of MyHome, said that the analysis confirmed a trend of significant activity in commuter counties. “We knew from our analysis of the Property Price Register for the first half of 2019 that activity in commuter counties was sharply rising, and our analysis this time round proves that this trend continued throughout the year,” she said. 

“The affordability of properties in the counties around Dublin is proving to be extremely popular especially with first-time buyers who are constrained due to the Central Bank’s mortgage lending rules. It is good to see new building starts in these counties have also continued, bringing more homes on the market where they are badly needed.”

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Oil prices edge down as traders assess China’s oil demand

Oil prices edged down this morning but held recent ranges as traders assessed China’s oil demand following the coronavirus outbreak and awaited a decision by major producers to cut output further to balance markets.

Oil is off more than 20% from peaks struck in January after a spreading virus hit demand in the world’s largest oil importer and fuelled concerns of excess supplies. 

Brent crude slipped to $53.63 a barrel in early Asian trade, the lowest since January 2019, before recovering to $54.37, down 10 cents. 

US West Texas Intermediate fell eight cents to $50.24 a barrel after striking a low of $49.56. 

“The overall sentiment is still bearish but markets are oversold,” said Avtar Sandu, a senior commodities manager at Phillips Futures in Singapore. He added traders took profit after prices hit technical support levels.

Beijing has orchestrated support for its companies and financial markets in the past week and investors are hoping for more stimulus to lift the world’s second-biggest economy. 

“Normally it takes at least two quarters before things start to pick up but there’s always hope for new stimulus in the market that will buoy the economy,” Sandu said. 

Worries over supply were not alleviated on Friday when Russia said it needed more time to decide on a recommendation from a technical committee that has advised the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production by a further 600,000 barrels per day. 

Algeria’s oil minister Mohamed Arkab said the committee had advised further output cuts until the end of the second quarter. 

“The coronavirus epidemic has a negative impact on economic activities, especially on the transport, tourism and industry, in China particularly, and also increasingly in the Asian region and gradually in the world,” Arkab said.

Russia Energy Minister Alexander Novak said Moscow needed more time to assess the situation, adding that US crude production growth would slow and global demand was still solid. 

Oil traders also said they are concerned the proposed reduction would not be sufficient to tighten global markets. 

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Dublin market down over 1% as count resumes

Shares on the Dublin market were lower this morning after Sinn Féin secured the highest percentage of the first preference vote in the weekend election. 

The ISEQ index was down just over 1.1% in early trade.

The banks were weaker with AIB losing 4.9%, while Bank of Ireland dropped 4.8% and Permanent TSB lost 1.7% in the first hour of trade.

Shares in housebuilder Glenveagh Properties sank 6.7%, while shares in property firm I-RES REIT were down 5.2%, Hibernia REIT lost 2.4% and Cairn Homes dropped 4.8%.

The surge in electoral support for Sinn Féin has seen the party secure 29 of the 78 seats filled so far, followed by Fianna Fáil on 16 and Fine Gael with 14 seats. 

The Green Party has 5 seats so far, Solidarity/People before profit has 2, Labour has one and independents have eight. 

Leaders of the main parties have been marking out their positions, ahead of possible talks on government formation.  

Sinn Féin leader Mary Lou McDonald has said that voters clearly want her party to be in government. 
 

Speaking on RTÉ’s Morning Ireland, KBC Bank Ireland’s chief economist Austin Hughes said the election result may weigh on sentiment in the short-term, though perhaps not by as much as it would in previous years.

“In general markets, businesses, consumers don’t like uncertainty but in recent years uncertainty’s become a central feature of the global landscape,” he said. “Whether you’re talking about political uncertainty across Europe that seen the rise of very radical parties and promises, or closer to home uncertainty around Brexit, by and large markets, businesses and consumers have tended to weather that problem.”

He said uncertainty was now seen as “part of the new normal”, with people tending to get on with whatever they were doing.

He said financial markets are likely to take a wait-and-see approach on Irish-linked investments, with the nature of the next government key to what will ultimately happen to stocks and bonds.

“They’ll wait to see what the scale and shape of fiscal policy will be like,” Mr Hughes said.

In recent months both the European Central Bank and the International Monetary Fund have called for some loosening of fiscal policies, which means a new government may have the flexibility to increase spending in certain areas.

Mr Hughes said that this could ultimately benefit Ireland’s image in the eyes of international markets.

“If they actually can make progress and deal in a fundamental way with problems like housing and health that impinge on the economy and broader Irish society that would be something that markets, consumers and businesses would be delighted about,” he said.

The risk, however, was that multiple parties compromise around a budget policy that gives everybody something small – but does not do enough to tackle the major issues in any meaningful way.

“We actually have quite an opportunity now because of the way the world economy is to address some of these issues with a coherent and consistent fiscal policy, so it’s really a case of whether the parties can be adult enough to actually focus on the measures rather than on their support base,” he said.

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China to halve tariffs on $75 billion of US imports

China said it would halve tariffs on $75 billion-worth of US imports as part of its trade truce with Washington and as officials look to calm markets unnerved by the deadly virus outbreak. 

The State Council Tariff Commission said the reductions would come in a month after China and the US signed a deal to dial down a long-running trade war that has hit the global economy. 

It also comes a day after Donald Trump hailed relations between the superpowers as the “best” ever in his State of the Union address.

Observers said Beijing was likely keen to get moving on the next phase of talks towards a wider agreement. 

Levies of 5% and 10% on more than 1,700 items – imposed in September – will be cut from February 14, the same day Washington is expected to halve tariffs on $120 billion worth of Chinese goods. 

Products affected include fresh seafood, poultry and soybeans as well as tungsten lamps for scientific and medical purposes, and some types of aircraft. 

The move is aimed at “promoting the healthy and stable development of China-US economic and trade relations”, the Commission said in a statement. 

“To alleviate economic and trade friction, and expand cooperation in these areas, China has also made relevant adjustments,” it added, referring to the US cuts. “We hope to work with the US towards the ultimate elimination of all increased tariffs.” 

The Commission also said it “hopes that both parties will be able to abide by their agreement, strive to implement its relevant content, and boost market confidence”.

Other retaliatory tariffs, however, remain in place.

The two countries in January signed a partial deal that eased tensions in their bruising trade war, with Beijing agreeing to buy an additional $200 billion in US goods over the next two years. 

As part of the phase one deal, the US said it would halve its tariffs on $120 billion of Chinese goods to 7.5%, while Donald Trump called off additional levies that would have taken effect last December. 

Today’s announcement comes as China grapples with a shortage of resources as it struggles to combat the coronavirus, which has claimed more than 560 lives and infected more than 28,000. 

On Tuesday, a top US trade official said the virus outbreak would delay Beijing’s plans to buy goods from the US  under the phase one deal. 

But Washington expects “minimal impact” from the virus on the US economy. 

China’s outbreak has caused Beijing to impose travel restrictions across cities, with millions of consumers staying home during its otherwise busy Lunar New Year holiday. 

The crisis is expected to hammer China’s already stuttering economy, as companies and factories delay the resumption of operations. 

Over the weekend, Beijing announced that US imports that can be used in its fight against the deadly virus will also be exempted from retaliatory tariffs imposed in the trade war. 

AxiCorp chief market strategist Stephen Innes said the tariffs cut was a “small but rather a sweet carrot to dangle”.

“In the wake of the coronavirus economic tumult, it’s not much of a stretch to assume China is eager to start the negotiations,” he said. 

Moody’s Analytics economist Xu Xiaochun told AFP a reduction in tariffs “makes sense” as China is expected to import more US goods as part of the phase one deal. 

But the timing might be more than a coincidence. 

“Perhaps it has got to do with market sentiment,” he said, noting that the Shanghai Composite and Shenzhen Composite indexes fell Monday when markets reopened after the recent holiday and reacted for the first time to the outbreak. 

“It could be a case of China giving signals that it is working towards easing tensions and improving trade relations, so as to ease financial volatility and risk aversion in the stock markets,” he said. 

Since losing almost 8% on Monday, mainland Chinese markets have surged more than 4% in the past three days, boosted by central bank support, bargain-buying and the tariffs announcement

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