Monday 16 September 2019

Enda huffs and puffs as the economy bumps along the bottom

Nick Webb and Susan Hayes sweat the small stuff to see if things are improving as Enda Kenny bids to put Ireland into recovery mode

CAN the changing price of a Latvian hooker or what we're searching for on Google tell you whether the economy is improving or continuing to bump along the bottom since Enda Kenny's Government came to power?

When these straws in the wind or less accepted statistics or trends are put together with some of the more mainstream data such as GDP or household debt numbers, a more compelling picture of the performance of the Irish economy begins to emerge.

Nick Webb and economist Susan Hayes -- authors of the weekly Recovery Index in the Sunday Independent -- drill down into some of the key numbers to find out if the policies of the Government have have had any impact on the economy since taking office 18 months ago. Are things improving and is Ireland in recovery mode? Not yet.

Bond Yields

The fall in nine-year bond yields has been one of the biggest successes for the Government since taking charge. This represents a real sign of financial markets' confidence in our ability to navigate out of this crisis.

In March 2011, the cost of government borrowing stood at a blood-chilling 9.4 per cent. This has fallen to 5.39 per cent last week. Ireland has returned in a very limited fashion to international bond markets. This is a major result for Enda and his Cabinet.

Ultimately, it makes it more likely that we'll be able to exit the IMF/EU bailout programme and borrow from the markets. There's still a lot of work to do on the deficit front and the medicine may yet kill us all.

Google searches

Weak consumer confidence is a big mother of an albatross weighing down the economy. Google searches can indicate what's going on inside the psyche of the nation.

The ongoing euro debt crisis has helped splatter consumer confidence and led to delays in investment or other spending. Irish people using Google to search for "euro collapse" peaked at the end of November 2011 and has fallen steadily since then. Searches for "bankruptcy" are well down from March 2011. Searches for "emigration" are down more than 20 per cent in the past 18 months.

Equally positive is the rising trend in searches for "restaurant" -- up 14.4 per cent.


Last year Ireland experienced economic growth, as measured by GDP, with a €2.5bn increase over the year on the amount we spend, save, invest and pay in tax.

Much of the 1.2 per cent growth in the economy last year was fuelled by a spectacularly strong April to June in 2011. Since then, things have hit the skids, with numbers for the first quarter of 2012 falling 1.1 per cent compared with the end of 2011. A slowdown across Europe has hit exports badly.

Last year, once the multinationals' contributions were stripped out, GNP figures showed that Ireland suffered a €3bn contraction in the activity generated by Irish nationals. GNP figures for the first quarter of 2012 were down by 1.3 per cent.

Men's pants

Sales of men's pants tend to rise in expectation of an improving economy.

Here's a true story: former US Federal reserve boss Alan Greenspan used to keep his eye on statistics showing sales of men's jocks. He believed that men only bought new underpants when they felt more positive about the future. Otherwise they concentrated on more essential purchases.

It's a nailed-on consumer confidence proxy. Latest numbers from show that sales of men's pants have leapt 218 per cent since Enda Kenny took charge in March 2011.

Household debt & wealth

In March 2011, the Irish household in aggregate owed €193bn and this has since fallen to €188.5bn in the intervening year.

This is confirmed by the fact that as households run down the liability side of their balance sheet, they don't have the capacity to build up their assets -- and hence, there was a decline of 0.12 per cent or €369m in our financial assets, which sucks out disposable income with it.

The Live Register

Tackling unemployment has to be the Government's number one priority.

Apart from all the social issues, high unemployment is poisonous for any economy as tax receipts tumble due to fewer earners and weaker spending while the outlay on benefits rises. Less business activity also means that there's less money coming in to state coffers from corporate and payroll taxes.

When the new Government took over in March 2011, seasonally adjusted numbers on the Live Register were 443,100. In August 2012, seasonally adjusted numbers were 434,400. That's a drop of 8,700. But improvement masks several things. Firstly the number of long-term unemployed has soared from 166,627 to 201,503. That's a rise of nearly 21 per cent in 18 months.

"While the Government is concerning itself with appeasing the public sector to keep them onside, the effort to tackle unemployment has run out of steam. The insubstantial jobs initiative, introduced earlier this year, is now a distant memory and is not working.

"Consequently, the numbers of long-term unemployed continues to grow, creating a structural problem that will blight generations to come," according to ISME boss Mark Fielding.

Mortgage arrears

The value of mortgages in arrears of between 91 and 180 days in March 2012 was €12bn. This is an extreme deterioration on four quarters previously when the figure was €7.9bn, representing an increase of 51 per cent.

This has a large impact on people via hampering the amount that banks can lend out for future mortgages, the mental anxiety around debt repayment and a compounding negative effect on confidence.

Latvian hookers

Ireland was swamped by an influx of prostitutes during the boom as Irish men were paying far more for sex than any one else in Europe.

Leaving aside the moral or criminal issues, the price of a hooker tracks the strength of an economy. It is higher when things are flying and falls fast in a slowdown.

There are more than 200 prostitutes in Dublin, primarily from Latvia, Poland and Eastern Europe. This hasn't changed much despite the downturn, according to law enforcement sources.

However the amount charged has dropped substantially over the last months. A 30-minute bonk with a prostitute costs between €60 to €80, down from €120 to €130 about 18 months ago.

Industrial disputes

There was a savagely high increase of 1,355 per cent in the number of days lost to industrial disputes during Q2 2012 versus Q2 2011. This affects our productivity, FDI attractiveness and our GDP.

Business start-ups

Small business is the biggest employer in the country and without a flourishing SME sector, we're well and truly rogered.

In March 2011, there were about 3.5 new enterprises being set up for each company that shut down. That has dropped to about 3.3 new companies for each one biting the dust. Even the online sector is weaker than expected with 3,641 .ie internet domain names registered back in 2011 falling to 2,609 this year..

Online dating

Economists believe that online dating is one of the biggest growth sectors when an economy goes south. Misery likes company, so the thinking goes.

"Cupid plc has continued to perform strongly in Ireland over the past 18 months and our sites -- which include, and -- now have around a 10 per cent share of the Irish online dating market.

"We've seen significant growth in subscriber numbers over the past 18 months, both in Ireland and elsewhere, which we attribute to online dating becoming ever more socially acceptable," says Cupid's Bill Dobie.

Foreign Investors

Take a bow, Barry O'Leary and the rest of the IDA. Foreign direct investment has being going gangbusters since the new Government settled into their comfy chairs.

There have been 86 job announcements in the 12 months beginning March 2011. This is well up on the 73 announcements a year earlier.

It is fair to say that a precedent was set with economic policy well-disposed towards international trade with low corporation tax, grants and a strong talent pool.

White vans

Sales of commercial vehicles are probably a better barometer of the economy than new cars. New vans indicate new business activity and capital expenditure by companies.

While eight more vans were sold in August 2012 than in the same month last year, overall the sales figures are poor, falling 2.52 per cent. Breakfast roll man is still at home, watching Jeremy Kyle. Speaking of which...

Jeremy Kyle viewers

If you haven't seen it, TV3's Jeremy Kyle Show features the detritus of society hauled straight up from their grim lives on a sink estate in the middle of Hull or Watford and plonked on morning TV. Shows include stuff like "I married my sister because I thought she was my mother".

Not much in the way of productivity for the economy while people are tuning in. Last week, TV3 said Jeremy Kyle viewing figures had risen 5.3 per cent from 41,200 in 2011 to 43,400 this year.

Bank lending/ deposits

There was 17 per cent less outstanding in loans to the Irish household for the purposes of purchasing houses, consumption and other reasons in March 2012 versus a year earlier, according to the Central Bank.

In addition, there was a fall of 0.62 per cent of deposits held by people in the Irish banks during the same period. The banks aren't lending and consumers are deleveraging or using their savings for living costs. The lack of finance is hitting home buyers and small business hard.

Mini skirts

Women's haircuts get shorter in a weak economy, so they don't have to spend as much money on maintenance. On the flip side, women's skirts get shorter when the economy is about to improve.

The Hemline Index was created by University of Pennsylvania Wharton School professor George Taylor in 1926. The omens are looking good, with research at New York fashion week showing a major jump in the number of short skirts compared to the winter collections of 2011.

Latest figures show that sales of miniskirts in Ireland have risen 12 per cent since March 2011. Mind you, sales of fake tan are down 31 per cent in the same period.


Property prices are one of the biggest single factors when it comes to consumer confidence. Slumping prices and negative equity are one of the key reasons for the depressed domestic economy.

However there are some positive signs in the market. The glut of homes being advertised for sale is decreasing.

In June 2011, there were 59,000 properties for sale on This has dropped to 49,700. However, this is still a hefty volume of stock and hence, in the 12 months to May, prices fell by 15.3 per cent. However, recent months have seen tiny rises of house prices in certain areas.

Around 40 per cent of these transactions are cash buyers as banks close up shop.


When the wheels fall off an economy, the number of divorces falls as weak property markets, lack of finance to buy out a partner's share and expensive legal costs can be a deterrent to breaking up.

The Court Service heard 3,358 applications for divorce in 2011, down from 3,381 in the final full year of Brian Cowen's disastrous government. The amount of judicial separations also fell by 3 per cent to 1,379.


A barnstorming performance by exporters has kept the economy from sinking beneath the waves since the downturn hit.

Ireland's surplus over imports grew by €5.6bn last year. This was reflected in port traffic as the amount of goods forwarded from our ports throughout the country in 2011 was the highest level on record at 15,240,000 tonnes, that's a 6.1 per cent increase on the year before.

Takeaway coffee

Takeaway coffee is one of the ultimate symbols of discretionary spending. One might have expected sales to fall off a cliff as consumers pulled back on non-essential purchasing.

However, like-for-like sales at Bobbie Kerr's Insomnia rose by 1 per cent in the year from March 2011 to March 2012. Caffeine is clearly rather addictive.

Price of oil

There's not a heck of a lot that Enda Kenny and the Cabinet can do about oil prices, with Brent Oil rising 3.6 per cent since March 2011.

But lashing huge taxes on petrol and diesel has hit commuters and businesses, further weakening disposable income and margins. Rising oil prices have also hit the cost of food, raw materials and anything that needs to be transported from A to B.

Last week's consumer price index showed that inflation rose to 2 per cent in August up from 1.6 per cent a month earlier, with much of the jump due to fuel costs.

"CPI inflation is likely to stay close to 2 per cent in the rest of 2012, pushing down on real incomes and posing a threat to consumer spending growth in the final quarter of the year," notes Davy economist Conall MacCoille.

Tourist numbers

The number of overseas visitors in the first six months of 2012 was 2.982m, down ever so slightly from the 2.984m recorded in the first six months of 2011.

But the amount of money spent by tourists is probably the most important thing to watch as it impacts directly on the Exchequer. In the final year of the Fianna Fail government the 5.95m tourists visiting Ireland spent on average €504.20 per person. This grew to €506.41 in 2011.

New figures last week showed the number of tourists visiting Ireland rose by 7.9 per cent compared with 2010.

Tourism Ireland boss Niall Gibbons noted that the sector's performance was mixed this year but that anecdotal evidence suggested increases in tourists coming to Ireland.

"Hotel occupancy is up on 2011, although the spread is uneven, with urban areas, particularly Dublin, faring better," he said. "Growth in visitor numbers will depend to a large extent on improved economic conditions and consumer confidence in our source markets."

Investment in capital projects

In the year after the Government took office, capital investment increased by 8 per cent. This expenditure creates short-term jobs, but in the construction sector where we are witnessing structural unemployment.

Euro exchange rate

The euro has weakened against the dollar, falling from $1.38 to $1.33 between March 2011 and 2012, thanks to the European debt crisis. This has been a true boost for exporters, who generated greater revenues as a result.

Lipstick/ make-up

The so-called 'Lipstick Index' tracks sales of lipstick and works off the theory that in a weak economy women will treat themselves to small purchases to make up for not buying expensive stuff.

Rising lipstick sales indicates a weak economy -- or so the theory goes at any rate.

Latest numbers show that sales of lipstick have fallen 28 per cent since Enda Kenny took charge.

It's worth noting that sales of foundation have risen by 47 per cent. However, foundation is seen as a necessity whereas lipstick is not.

Sunday Indo Business

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