Trade surplus surges in May

The trade surplus rose by 44 per cent in May to €3.8 billion, new data from the Central Statistics Office showed today.

But the rise was due to a fall in seasonally adjusted imports, which declined by 24 per cent or €1.2 billion, between April and May. Exports remained static for the month.

In the first four months of the year, exports rose by 8 per cent to €31.2 billion compared to a year earlier. This was driven by a 17 per cent rise in the exports of medical and pharmaceutical products, and a 14 per cent increase in the value of exports of organic chemicals. Exports of petroleum were up 126 per cent, or €208 million.

Exports to the US showed a 17 per cent, or €1.07 billion, rise over the four-month period, while France imported 18 per cent more Irish goods, or €276 million. Exports to Switzerland were up 25 per cent, or €258 million.

This was partially offset by a 5 per cent drop in exports to Belgium, and a €225 million, or 19 per cent, decline in goods sent to Spain.

Imports were 13 per cent higher in the four-month period, rising to €17.3 billion. This was accounted for by imports of other transport equipment, which rose by 27 per cent or €401 million. Petroleum imports were up 24 per cent, while medical and pharmaceutical products imports were 22 per cent, or €251 million, higher.

Minister for Jobs, Enterprise and Innovation Richard Bruton welcomed the trade figures.

"Today's figures, the latest in a growing body of evidence of high levels of performance in manufacturing and exports, show that an export-led recovery is becoming a real possibility. This is particularly welcome at a time when we are receiving mixed news about the global economy," he said.

"We must also ensure that our indigenous companies continue to increase their exports.

"Above all, we must ensure that our competitiveness continues to improve at a faster rate than our competitors, particularly at a time when costs outside our control are high."

Bloxham chief economist Alan McQuaid said the figures were "much better than expected".

"The Dutch Central Planning Bureau measure of world trade suggests that in general terms trade momentum has been rising over the last six months or so, and overall, external demand is expected to expand further in 2011 and 2012, though at a reduced pace to that of 2010," he wrote in a note.

"However, demand for Irish merchandise exports will be supported by competitiveness gains from the lowering of the cost base, but the ongoing weakness of sterling versus the euro will to some degree weigh negatively on Irish food and drink exports to the UK. Taking all the factors into consideration, some loss of momentum in merchandise export activity is anticipated in 2011, although volume growth, of around 5 per cent, is set to remain relatively buoyant."

He said the figures were evidence of a "two-tier" Irish economy.

"The bottom line is that the export sector offers the one ray of light at the moment in a still fairly dismal economic picture, and will be the key driver of the Irish recovery story in the short-term," he said.

"All in all, we still think 2011 will be a decent year for Irish exports, with the merchandise trade surplus now forecast to be around €45-46 billion compared with €43.5 billion in 2010, and leading to another positive contribution from net exports to GDP growth."