Economic Life and COVID-19 in Ireland, 2020-2021

Irish Industrial Production by Sector

The value of sales, excluding VAT, of products manufactured in Ireland was €127.2bn in 2020, a decrease of 5.5% from €134.6bn in 2019. This drop in the Net Selling Value (NSV) occurred despite an increase in numbers employed in Industry during 2020 compared with the previous year, (see How we worked), and a rise in retail sale volumes in the second half of 2020, (see What we consumed). See Table 4.1 and Figure 4.1.

Based on the results of the annual PRODCOM survey, the three largest sectors in 2020 were Food, Chemical and Pharmaceuticals, with a NSV of €95.4bn, or 75% of all production. In 2019, the NSV for these three sectors was higher at €98.3bn but the share of the total was slightly lower at 73%.

All sectors had a drop in NSV in 2020, which coincides with the start of the COVID-19 pandemic. The Transport equipment sector had the largest annual decrease (-15.9%). This was closely followed by Rubber and plastics (-15.5%) and Textiles (-14.8%). The sectors which were the least impacted by the COVID-19 pandemic in terms of domestic NSV were Pharmaceutical products (-1.6%), Food products (-4.6%) and Chemical products (-4.7%). See Figure 4.1.

In 2020, the value of all Food and Beverages production was €24.4bn and represented 19.2% of total NSV. These sectors also accounted for 19.2% of total NSV in 2019, however the value of goods sold was €25.8bn, €1.4bn higher than 2020. Although NSV of Food and Beverages declined in 2020, the expenditure by households on Food (CP011), Non-alcoholic beverages (CP012), and Alcoholic beverages (CP021) increased by €676m, from a combined €11.0bn in 2019, to €11.7bn (See What we consumed).

National production at a sector level is discussed in further detail in Impact on macro-economics.

Imports and Exports of Goods

Employment levels were generally lower in 2020 than 2019, but by Q2 2021 had rebounded and were greater than the same quarter pre-pandemic (see How we worked). Although those who remained in employment received higher average weekly earnings, household spending on goods and services fell in 2020 compared with 2019. However, by Q2 2021, based on personal consumption expenditure, consumer spending was 19.3% higher than the same quarter one year previous, and just 4.0% less than the same period two years previous, (see What we consumed). It is therefore interesting to examine whether changes in the labour and earnings market, along with altered consumer spending, had any effect on the value and volume of the State's international trade.

The value of goods exported rose by 6.2% between 2019 and 2020, from €152.5bn to €162.1bn. However, as prices received by producers in export markets fell, the increase in the volume of goods was nearly twice as high at 11.9%. See Table 4.2.

Between 2019 and 2020, the value of goods imported fell by 4.3% from €91.0bn to €87.1bn. When the impact of price changes are removed, the volume of goods imported rose by 0.9%.

On a quarterly basis, the value of goods exported increased by €6.6bn (17.6%) in Q1 2020, fell by €0.7bn (down 1.8%) in Q2 2020, increased by €2.9bn (7.7%) in Q3 2020, and rose again by €0.7bn (1.8%) in Q4 2020, compared with the same quarters pre-pandemic (2019). See Table 4.3.

In contrast, the value of goods imported fell in the first three quarters of 2020 compared with 2019 - by €0.1bn (down 0.5%) in Q1, by €3.7bn (-16.6%) in Q2 and by €1.2bn (-5.6%) in Q3 - before a rise of €1.1bn (+4.3%) in the last quarter. See Table 4.4.

The value of goods exported fell by 8.6% in the first quarter of 2021 compared with one year earlier, before increasing by 6.7% in Q2. The value of goods exported was higher in Q1 (by 7.5%) and in Q2 (by 4.8%) of 2021 than the same quarters of 2019, before the pandemic.

Imports of goods rose by 43.6% in the second quarter of 2021 compared with the same quarter of 2020 and by 19.7% compared with Q2 2019. See Table 4.4.

Exports of Chemicals and related products n.e.s. accounted for nearly €2 in every €3 of goods exported in 2020. They grew during each quarter of 2020 compared with the same period in 2019 but fell by 4.8% in Q1 and by 2.8% in Q2 2021 compared with the same quarters one year previous.

Machinery and transport equipment accounted for 38.5% of all imports in 2020, while 24.7% were Chemicals and related products n.e.s. In each quarter of 2020, imports of Machinery and transport equipment fell compared with the same quarter in 2019. In 2021, however, imports for this category rose by 8.6% in Q1 and by 60.9% in Q2 compared with one year previous, with the value of these imports in the second quarter of 2021 matching the value in Q2 2019 (€10.1bn).

The value of imports of Chemicals and related products n.e.s. rose in every quarter of 2020 and in the first two quarters of 2021, compared with the same period one year earlier. By Q2 2021, imports of these goods were worth €7.7bn, well above the value of €4.2bn two years earlier in 2019.

Services Producer Price Index

The experimental Services Producer Price Index (SPPI) measures changes in the average prices charged by domestic service producers to other businesses for a selected range of services. In most cases these services are provided to business customers only and so individual price indices should not be considered indicative of more general trends in the economy. The index covers transaction costs from business to business and excludes consumers who are covered in the Consumer Price Index (CPI). For more details on the SPPI see the latest release.

Average prices charged by service providers in Ireland to other businesses increased in each quarter of 2020 compared with the same period in 2019, as measured by the experimental SPPI. Prices rose by 5.9% in Q1, 5.1% in Q2, 3.9% in Q3 and 4.1% in Q4 compared with the same quarters in 2019.

The SPPI had a small drop of 0.8% in the first quarter of 2021 compared with Q2 2020 but rose slightly by just 0.1% in Q2 2021 compared with one year earlier. By Q2 2021, services producer prices were 5.2% higher than the same quarter in 2019, before the pandemic. See Figure 4.2 and Table 4.5.

Apart from Postal and Courier and Warehousing, Storage and Cargo Handling, all sectoral SPPIs increased in 2020 compared with 2019. The highest rises were in Sea and Coastal Transport (+14.1%), Employment and Human Resource Activities (+8.5%) and Computer Programming and Consultancy (+6.6%). See Figure 4.3.

Average prices charged by domestic service providers in Sea and Coastal Transport rose by 17.1% in the year to Q1 2021 and by 23.4% in the year to Q2 2021 - these were the highest rises in the first half of 2021. By Q2 2021, average prices charged by service providers in this sector were 45.3% greater than the same quarter pre-pandemic (2019). See Table 4.5.

Of the sectors included in Table 4.5, only the Advertising, Media Representation and Market Research and Air Transport sectors recorded lower average prices charged in Q2 2021 compared to the same quarter pre-pandemic (2019), with Air Transport being -0.2% less expensive and prices in the Advertising, Media Representation and Market Research sector lower by 1.7%.

Building Materials

Although construction sites had to close at various times during 2020, there were 20,532 new dwellings completed, a fall of 2.5% compared with 21,068 in 2019. Wholesale prices for building and construction materials remained stable in 2020 compared with 2019, with increases of less than 1% in each quarter compared with the same quarter of 2019. See Figure 4.4 and Table 4.6.

Wholesale prices of building and construction materials began to increase in Q1 2021, rising by 1.1% in comparison with Q1 2020. Prices grew further in Q2 2021 compared with the same quarter the year previously, increasing by 5.5%. By the second quarter of Q2 2021, prices were 5.7% greater than Q2 2019. These increases in wholesale prices of construction and building materials were recorded at the same time as rising annual prices of new residential dwellings and increased earnings (see What we consumed).

Although the overall cost of building materials increased in each quarter of 2020 relative to 2019, wholesale prices of some materials declined or stayed the same, such as the price of Rough timber (including plain sawn) which fell in each quarter. However, by Q2 2021, excluding the price of Stone, sand and gravel which fell by 0.3% and Bituminous macadam, asphalt and bituminous emulsions which remained unchanged, wholesale prices for all building and construction materials were higher than the same quarter pre-pandemic (2019). See Figure 4.5.

The wholesale price of Rough timber (including plain sawn) increased by 34.4% between Q2 2019 and Q2 2021. This was over three times the second largest percentage price increase of 11.0%, recorded for wholesale prices of Electrical fittings. Wholesale prices of Ready mixed mortar and concrete rose by the lowest percentage between Q2 2019 and Q2 2021 at just 0.3%.

New Dwellings

One of the public health restrictions during the pandemic was the closure of construction sites at various times during 2020 and 2021. Despite this, there were 20,532 new dwellings completed in 2020, only 536 fewer than in 2019. See Figure 4.6 and Table 4.7.

The number of new dwellings completed during 2020 fluctuated in tandem with the public health restrictions. There were 682 extra new dwellings completed in Q1 2020 compared with Q1 2019 but there were 1,571 fewer in the second quarter of 2020 compared with one year earlier. In Q3, there were 600 fewer new dwellings completed compared with Q3 2019 but in Q4 there was an additional 953. See Table 4.7.

There were many public health restrictions in Q1 2021. This is linked to fewer new dwelling completions in Q1 2021 (3,929) compared with Q1 2020 (4,928). However, the second quarter of 2021 saw a recovery in construction activity, with 4,989 completions compared with 3,230 one year earlier. New dwellings completed in Q2 2021 were just above those completed in the same quarter pre-pandemic (2019).

The Dublin region had the highest number of new dwelling completions in 2019 at 6,918 units. This pattern continued in 2020 (6,042 units) and during the first half of 2021 (2,494 units). The Mid-East accounted for the second highest number of new dwelling completions in 2019 (5,316 units), 2020 (4,835 units), and the first half of 2021 (1,904 units). The Midlands recorded the lowest number of new dwelling completions in 2019 (845 units) and 2020 (920), while the Border accounted for the lowest number of completions in the first half of 2021 (at 521). See Table 4.8.

Planning Permissions Sought

The pandemic had a significant impact on earnings, the labour market and businesses. It is interesting to examine if it also had an impact on the number of residential planning permissions which were granted.

In 2019, before the pandemic, planning permission was granted for 39,242 new dwellings, split almost equally between houses (19,651) and apartments (19,591). Despite the labour and earning changes recorded throughout the year, there were 44,538 new dwelling units granted planning permission in 2020, a 13.5% increase on 2019, split between 26,224 apartments and 18,314 houses. See Fig 4.7 and Table 4.9.

As some restrictions were reintroduced at the start of 2021, the number of units for which planning permission was granted fell by over 50% in the first quarter compared with one year earlier, falling from 14,132 in Q1 2020 to just 6,963 in Q1 2021. However, 11,150 units were granted planning permission in Q2 2021, a large increase compared with 7,271 one year earlier and higher than the 9,566 granted two years earlier, before the pandemic.

Compared with 2019, there were fewer planning permissions granted in 2020 for extensions and for alterations & conversions. Planning permission was granted in 2019 for 6,244 extensions compared with 5,763 in 2020, while alterations & conversions received 3,082 planning permissions in 2019 compared with 2,950 in 2020. See Figure 4.10.

Despite some restrictions being reintroduced, the number of extensions and alterations & conversions granted planning permission increased by 88.4% in the first six months of 2021 compared with 2020. Comparing the first quarters of both 2020 and 2021, the numbers rose from 2,197 to 2,893, while a comparison of the second quarters shows an increase from 1,102 to 3,322.

Producer Prices

While there were significant changes to the labour and earnings market throughout 2020, average consumer prices only fell by 0.3% (see What we consumed). Similarly, despite an initial fall in retail sales volumes in Q2 2020 compared with Q2 2019, the second half of the year featured a rebound with retail sales volumes higher in Q3 and Q4 2020 than the same quarters of 2019.  It is therefore of interest to examine whether the pandemic had any effect on the prices received by producers for their output.

Factory gate prices for all manufacturing, (as measured by the Industrial Producer Price Index), fell in each quarter of 2020. Compared with the same period one year earlier, factory gate prices fell in 2020 by 3.6% in Q1, 9.3% in Q2, 11.8% in Q3 and 10.1% in Q4. See Figure 4.8 and Table 4.11.

The decline in prices received by manufacturing producers was not uniform across home sales and export sales.

Average prices received by producers for export sales fell by around 10% or more in the second, third and fourth quarters of 2020 compared with the same periods in 2019. However, average prices for home sales fell by less than 2% in each quarter of 2020 compared with the same quarters of 2019. This disparity between home and export prices may be influenced by currency fluctuations in the export market. See Table 4.11.

Despite the easing of some public health restrictions in Q2 and rising consumer costs (as measured by the CPI), average prices received by manufacturing industries were 6.7% lower in Q2 2021 than Q2 2020, and 15.4% less than the same period pre-pandemic (2019).

Not all industrial sectors received lower prices for their outputs. Average prices received by producers remained the same or increased in the Textiles, Wearing apparel and Leather and related products industries in each quarter of 2020 and in the first six months of 2021, in comparison to the same period 12 months earlier. By Q2 2021, average prices received by Textile producers were 8.9% higher than the same period pre-pandemic, while prices received for Leather and related products were 2.4% more expensive. Average producer prices for Wearing apparel remained unchanged. See Table 4.11.

Agricultural Prices

Household expenditure on Food increased by €159m between 2019 and 2020, rising from €7.9bn to €8.0bn while Catering services fell by €4.9bn over this time period, falling from €13.8bn to €8.9bn (see Table 3.1). The impact on the prices of agricultural products during the pandemic will be examined in this section.

As the pandemic began in Ireland in 2020, overall average prices of agricultural produce, (as measured by the Agricultural Output Price Index), fell by 3.9% in April, 4.9% in May and 4.2% in June compared with the same months in 2019. However, average prices for agricultural output increased in each month of the second half of 2020 compared with 2019. See Figure 4.9, Table 4.12 and Table 4.13.

Average prices for agricultural output continued to rise in 2021 compared with 2020. There were increases of 13.5% in April, 13.4% in May, 13.2% in June, 11.3% in July and 10.5% in August of 2021 compared with the same months in 2020. In August 2021, average prices for agricultural outputs were 17.4% higher than the same month in 2019, (before the pandemic).

Changes in average agricultural input prices were more varied, with prices lower in each month of 2020 compared with the same periods of 2019. However, in February 2021 average input prices increased compared with one year earlier, and by August they were 10.1% more expensive than in August 2020 and 6.8% higher than in August 2019, (before the pandemic). See Tables 4.14 and 4.15.