Trade surplus falls for second month

Thu, May 17, 2012, 01:00

IRELAND’S TRADE surplus declined for the second month in a row in March, but there was some good employment data yesterday in the form of a new survey from Ibec which showed that one in three employers hope to increase pay this year.

According to the Central Statistics Office, Ireland’s trade surplus fell as imports jumped by 26 per cent but exports experienced slower growth.

While a surplus of some € 3 billion was recorded in March, according to preliminary figures, this is € 600 million less than that reported in February. Exports rose in March, up by 5 per cent or €361 million to €7.6 billion on a seasonally adjusted basis, but imports rose by a significant 26 per cent or € 961 million, more than offsetting growth in exports.

The rise in imports was largely due to an increase of € 675 million in the imports of transport equipment, such as aircraft.

For the first three months of 2012, exports amounted to €23.7 billion and imports to € 13.3 billion, representing a trade surplus of €10.3 billion.

In a note, Glas Securities said it was “encouraging” to see that exports in the first quarter had remained at the same level as last year. “While concerns regarding external demand look set to continue, trade figures have not shown significant signs of weakening as yet,” it added.

In other economic news, one in three Irish employers told employers’ association Ibec they hoped to increase pay in 2012, with almost 60 per cent planning to hire new permanent or temporary staff in the next six months.

However, 63 per cent of employers responding to the pay survey indicated that they intend to freeze basic pay rates, while a further 4 per cent said they would cut pay by about 7 per cent this year.

The survey, which was conducted among 550 Ibec member companies, pointed to average expected change to basic pay rates of +0.5 per cent.

“Pay expectations still need to reflect current difficult economic realities for most employers, many of whom are still not in a position to award general pay increases. Companies remain focused on regaining competitiveness and getting pay costs back in to line with our trading partners. This is vital if jobs are to be retained and new ones created,” said Ibec director Brendan McGinty, adding that Irish labour costs were still 12 per cent above the euro zone average.

On the issue of sick pay, the Ibec survey indicates that employers would cut back on occupational sick pay schemes if Minister for Social Protection Joan Burton followed through on proposals to introduce statutory sick pay.

The survey shows that 37 per cent would reduce the payment level to employees; 23 per cent would reduce the duration of payment to staff; and 18 per cent would change the eligibility criteria, if such a scheme was introduced.