Earnings Data

After a wait of over four months since we last examined earnings data on the Irish economy, the CSO have released the latest update of the Earnings, Hours and Employment Costs Survey.  This gives updated data for Q3 2009 so there is a significant lag in how quickly the data is published.
The headline figure is that there was a small drop of 0.8% in weekly earning in Q3 2009 compared to the same period 12 months earlier.  However, it should be note that hourly pay actually increased by 1.8% with the drop in earnings driven by a fall in the weekly hours worked of 2.6%.
Average weekly earnings in the private sector fell by 2.7%, while there was an increase in average weekly earnings in the public sector of 1.9%.  Note though that these are gross earnings and the public sector figures ignore the effect of the public sector pension levy introduced in March 2009.  This levy reduced take home pay in the public sector by between 5% and 8%. 

	Average Weekly Earnings	Annual Change	Quarterly Change
Industry	778.47	+0.1	-2.1
Construction	736.74	-2.4	-0.5
Retail & Wholesale	492.17	-3.2	-0.8
Transport & Storage	709.43	-6.6	-6.8
Accommodation & Food Service	352.64	+0.6	+2.9
Information & Communication	925.39	-5.3	+0.8
Financial, Insurance & Real Estate	901.02	-2.3	-3.3
Administrative & Support Services	798.52	-0.1	-1.1
Professional, Scientific & Technical	466.77	-3.8	-5.5
Public Admin & Defence	982.08	+3.0	-1.0
Education	878.10	-1.9	+1.6
Health & Social Work	759.68	+4.6	+0.8
Arts, Entertainment & Others	462.41	-8.9	-2.3

Spot the difference - update

In a post back in March we looked for differences between the Greek and Irish budgetary situations.  We came to two conclusions in terms of the size of the debt problems relative to each country’s GDP.

1. The annual government deficits in Ireland (-11.7%) and Greece (-12.5%) were similar.
2. Ireland was in a getter position as it was coming from a relatively low overall debt position (64% versus 115%).

It turns the first of these was wrong!  Today Eurostat released a revision of the 2009 government deficits.  The updated figures show that Ireland had the worst government deficit in 2009 running at 14.3% of GDP.  The Greek figure was also revised upwards to 13.6%.  The primary reason for the revision of the Irish numbers was the inclusion of the €4 billion capital injection in Anglo Irish Bank made last made to the general government deficit.  The reaction of the Minister for Finance is here.

Our spot the difference graph now looks like this.

The international reaction to the figures has focused on Greece. See here, here and here.  These reports give no attention to the Irish figures.  Domestic media loudly (proudly?) declare that Irish 2009 deficit biggest in the EU. 

The revision hasn’t been ignored on bond markets if we look at the daily changes in the yield on the 10-year Irish government bonds – graph here.  Not as bad as has been happening to Greece today but going in the wrong direction nonetheless.  The ‘others believe in us’ mantra may be losing its shine.

Greece on the brink

Bond yields on 10-year Greek government bonds have soared above 8%.  Here is a 3 month graph from Bloomberg to yesterday’s close.  Click to enlarge.

The drop seen after the announcement of the EU/IMF support package has been wiped out and yields are at new record levels.  The yield went over 8.3% for a time yesterday but dropped by the market close to 8.1%.  

Today has been another rollercoaster as we can see with graph on the right which gives the most recent real-time data for the 10-year Greek bond yield. The yield now charging towards 9% and only going in one direction.

The reason for this is an increased perception in the risk of Greek bonds, which is driving the price down.  As the price goes down the yield goes higher.  More graphs here.

When Greece comes to borrow money from bond markets (and they will have to borrow a lot) the interest rate they have to offer to get lenders will be determined by the yield investors can get from buying existing bonds on bond markets.

Greece now faces the choice of going to the markets to refinance their debts and rates of 9% or higher or calling in the support of the EU/IMF who have offered money at 5%.  Which one would you go for?

Two lines for a decade

The following graph contains two lines tracked for almost a decade.  Click the image to enlarge.  The two lines are:

1. The Consumer Price Index
2. Six-month moving average of my net pay

Both series are set equal to 100 in October 2000 and changes are relative to that level.  I won’t indicate which line is which but you can have a good guess!

Of course this is a bit of a moot comparison for a multitude of reasons and it really is just a graph with two lines rather than revealing anything significant.  Here are just two.

1. The CPI is a price index and not a cost-of-living index.
2. Changes in pay should be related to changes in productivity.

And there are many many more.  Still I thought it was interesting for what it is worth.

For anyone around Limerick today

George Lee is to make his return to the public forum with a lecture in the University of Limerick. Might be interesting.  More here and here.

George Lee: Former RTÉ Economics Editor and Fine Gael TD

Lecture: ‘Ireland’s Economic Collapse: Where To Now?’

Date: Tuesday 20 April 2010, 6pm

Venue: CSG01 – Computer Science Building

Here’s one who doesn’t ‘believe in us’

Nadeem Walayat writing on www.marketoracle.co.uk is definitely one commentator who does not believe in us. In fact he thinks we are worse than Greece.  Here’s an extract from the piece and the graph he uses to highlight his point.

The following graph attempts to paint an accurate picture of the current relative state of the trend towards bankruptcy of the worlds major economies which takes into account public and private debt, unfunded liabilities, budget deficits, and debt denominated in foreign currencies, as well as taking into account the historic track record of the countries in dealing with past debt crisis. The results are shown as a % of the countries risk of going bankrupt where Iceland would be at 100% following its defacto debt default.

Whilst the mainstream press these past two months has been obsessed with the Greek debt crisis, the above graph clearly illustrates that a far larger debt crisis looms in Ireland that could soon transplant Greece in the debt crisis headlines over the coming months, similarly a number of other Euro Zone countries head the risk towards bankruptcy league table with Belgium and Portugal not far behind Greece. The price that these countries pay for being stuck in the Euro single currency is that they cannot devalue to try and gain some competitive advantage for their economies and therefore try and grow and inflate their way out of a high debt burden that stifles economic activity.

I am a little unsure as to what the vertical axis of the graph actually means.  He seems to have created a bankruptcy measure based on a number of factors (public and private debt, budget deficits, etc.) and then indexed it so that Iceland represents 100%, as they have defaulted, and all other countries are scored relative to that. 

Whatever the methodology, and it appears questionable,  we have the worst score.  It is likely we will see more analysis like this produced on Ireland.

Retail Sales sub-Indices

Along with the All Business and All Business excluding Motor Trades the CSO’s Retail Sales Index provides 13 sub-indices.  Here are the seasonally adjusted monthly and annual changes for each of these sub-indices by volume and value for February.
Clicking any of the titles under the ‘Sub-Index’ heading will bring up a graph showing the values of the sub-index for the past three years, with the associated annual and monthly changes, as well as the weighting given to each sub-index in the overall Retail Sales Index for each month.

Sub-Index	Volume		Value
	Monthly	Annual	Monthly	Annual
Motor Trades	+34.5%	+30.5%	+37.2%	+26.7%
Non-Specialised Stores	-1.9%	-1.7%	-3.9%	-7.4%
Department Stores	+6.3%	+10.9%	+2.3%	-1.2%
Food, Beverages & Tobacco	-2.3%	-5.0%	-3.1%	-11.6%
Fuel	+7.5%	-10.5%	+7.8%	+3.2%
Pharmaceuticals, Medical & Cosmetics	+5.9%	+1.2%	+2.6%	-8.1%
Clothing, Footwear & Textiles	+1.3%	+1.8%	-0.2%	-9.0%
Furniture & Lighting	+14.9%	+4.7%	+13.9%	-3.8%
Hardware, Paint & Glass	+4.8%	-13.2%	+4.0%	-15.5%
Electrical Goods	+3.3%	+3.5%	+4.4%	-4.8%
Books, Newspapers & Stationery	-1.7%	-15.3%	-2.0%	-16.3%
Other Retail Sales	+15.3%	+2.8%	+13.6%	-4.2%
Bars	-2.7%	-10.9%	-2.8%	-13.9%

We can see the very strong performance of the motor trades in February.    Overall there are still plenty of red figures in the table.  This is particularly true for the annual changes by value with 11 of the 13 sub-indices still negative.  Annual volume changes are negative for only six sub-indices.  For six of the sub-indices we are buying more stuff than this time last year but paying less for it. 
The monthly figures have more positive numbers with only four monthly declines by volume and five by value.
The gap between value and volume is most evident in the Department Store sector where sales are up 10.9% by volume but down 1.2% by value over the year.  Click the title above to see the graph.  In the graph the red line represents the volume figures and blue line the value figures.