Retail suffers September slump amid uncertainty

Retail suffers September slump amid uncertainty

Retailers have had their worst month since July 2013, according to research carried out among members of lobby group Retail Excellence Ireland.

The Grant Thornton Retail Excellence productivity review for quarter three shows that sales were up by just over 1pc in July and August, but down 3.34pc in September, leaving the quarter down 0.63pc.

David Fitzsimons, group chief executive of Retail Excellence, said: “Almost all sectors across the retail industry contracted during the month, with the worst performers being footwear (-13.08pc) and menswear (-11.02pc). The aggressive declines in the footwear sector were the worst recorded since November 2009.”

He said Brexit and general political uncertainty are negatively affecting consumer sentiment and spending.

Growth in online sales fell steadily over the quarter, with these sales up 12.17pc in July, 8.13pc during August and just 4.17pc in September.

“The fact that the rate of growth in online sales has steadily declined across the year to date proves how distressed the situation is,” said Fitzsimons.

Giftware, ladies’ fashion and children’s wear all suffered last month, according to the report, which is based on research from 4,500 stores.

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91% of households now have internet access

91% of households now have internet access

New Central Statistics Office figures show that 91% of households have internet access in 2019, a rise of two percentage points since 2018.

The CSO’s latest Information Society Statistics also reveal that fixed broadband is the most common type of household internet access at 84%, compared with 47% using mobile broadband.

The statistics also show that 79% of internet users are daily internet users, and of this cohort, 58% use the internet several times a day.

It noted that 5% of 16-25 year olds use the internet “all the time”.

Finding information on goods and services and email are the most common internet activities, carried out by 84% of internet users, the CSO said.

The next most common activities are instant messaging at 75% and reading or downloading online news sites, newspapers and or magazines and internet banking.

The CSO noted that clothes and sports goods are the most common type of goods or service bought online, purchased by over half of internet users at 51%, followed by holiday accommodation at 47% and other travel arrangements at 45%.

Meanwhile, the figures also show that 12% of internet users are now using home smart technology – this is where people use the internet to interact with household equipment or appliances, including heating, lighting, and security systems.

On security, the CSO said that receiving fraudulent messages – or phishing – was experienced by 15% of internet users, while online identity theft was reported by 2% of internet users.

9% of those surveyed also found that their children had accessed inappropriate websites.

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China’s growth slows to weakest level in 27 years

China’s growth slows to weakest level in 27 years

China’s economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, data showed today.

Chinese gross domestic product expanded 6% in the three months from July to September, down from 6.2% in the second quarter, according to the National Bureau of Statistics (NBS).

The reading – in line with an AFP survey of 13 analysts – is the worst quarterly figure since 1992 but within the government’s target range of 6-6.5% for the whole year.

China’s economy grew by 6.6% in 2018.

“The national economy maintained overall stability in the first three quarters,” said NBS spokesman Mao Shengyong.

“However, we must be aware that given the complicated and severe economic conditions both at home and abroad, the slowing global economic growth, and increasing external instabilities and uncertainties, the economy is under mounting downward pressure,” he said.

Services and high-tech manufacturing were the key areas of growth, while employment was “generally stable”, he added.

Beijing has stepped up support for the economy with major tax and rate cuts and has scrapped foreign investment restrictions in its stock market.

Earlier this week the central bank said it was pumping 200 billion yuan ($28 billion) into the financial system through its medium-term lending facility to banks, which is designed to maintain liquidity.

But the efforts have not been enough to offset the blow from softening demand at home.

The trade conflict and weak domestic demand prompted the International Monetary Fund to lower its 2019 growth forecast for China to 6.1% from 6.2% on Tuesday.

The long-running trade war with the US has also chipped away at the Chinese economy.

This week, Beijing posted weaker-than-expected import and export figures for September after Washington imposed new tariffs that month.

And there were mixed signals for China’s economy in September.

Industrial output rose 5.8%, from 4.4% in August, led by a surge in demand for solar panels and electric vehicles, according to the NBS.

But fixed-asset investment slid to 5.4% year on-year in the nine months from January to September, from 5.5% in January to August, as the government warned against risky borrowing to build roads and bridges that could artificially pump up GDP in the short run.

China’s army of consumers were slowly starting to open their wallets again, with retail sales edging up 7.8%year-on-year in September, compared with 7.5% in August.

Analysts said that despite a stronger September, pressure on economic activity should intensify in the coming months.

They said they expects infrastructure spending to decline as China tries to rein in toxic debt and added that the recent boom in property development looks set to unwind.

A “phase one” deal announced by US President Donald Trump last Friday after he met China’s top negotiator Liu He in Washington offered a temporary reprieve from further tariff hikes.

NBS spokesman Mao said the mini-deal was “good sign” for global markets.

“We feel that the global economy and global trade are increasingly moving towards reducing protectionism and freedom,” he said.

The deal, however, did not roll back any of the stinging tariffs already imposed on hundreds of billions of dollars in trade between the economic powers, nor did it address another round of import taxes planned for December.

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Ireland sees 12% increase in brand value – survey

Ireland sees 12% increase in brand value – survey

Ireland has recorded a 12% increase in brand value over the past year to bring its total to $604 billion.

This is according to the latest report by Brand Finance, which ranks the 100 most valuable and strongest nation brands every year.

Brand Finance said that Ireland was the fastest-growing nation brand in Western Europe this year with all the other players in the region recording a slight rise or even a decline.

Although ranked 26th globally for absolute brand value, Ireland is second on the ranking for brand value per capita, coming behind only Luxembourg.

During the year, the UK’s nation brand value and the combined brand value of the other EU member states have only grown 19% and 32% respectively.

“Currently the outlook for growth in the Irish economy looks positive, bolstered by the strength of our home-grown brands, and the very significant influx of inward investment in recent years,” commented Simon Haigh, Managing Director of Brand Finance Ireland.

“However, a potential no-deal Brexit is likely to cause challenges for the Irish economy moving forward,” he cautioned.

Overall, the US is the world’s most valuable brand at $27.7 trillion, while China continues to grow at a strong rate – recording a 40% increase in brand value to $19.5 trillion – to reach second position.

Behind the US, China, and third-placed Germany, Japan’s brand value has increased 26% to $4.5 trillion, pushing the UK into 5th rank with a value of $3.85 trillion.

Although there were no new entrants to the top ten, India made the largest jump within moving from 9th to 7th position.

Other movers in the top 10 include Canada, dropping from 7th to 8th, Italy falling from 8th to 10th and South Korea, which has inched up one place from 10th to 9th.

Today’s report also shows that globally, the average year-on-year nation brand value growth among the developing economies stands at 13.9%, compared to as little as 0.4% for the developed economies

This means that, on average, the nation brands of developing economies have been growing at a pace 31.3 times faster than the developed ones.

“With the Western world seeing a real crisis of leadership on both sides of the Atlantic, the developing world is catching up. Bolder, more agile, increasingly innovative African, Middle Eastern, Asian, and Latin American nation brands are racing ahead at breakneck speed, poised for further growth in the years to come,” Mr Haigh said.

Although catching up, the combined nation brand value of the 65 developing economies in the study – $37.8 trillion – remains far behind that of the 35 developed economies, which sits at $60.3 trillion.

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Fear of ‘difficult’ tenants driving landlords out of market – RTB

Fear of ‘difficult’ tenants driving landlords out of market – RTB

The chairman designate of the Residential Tenancies Board has said the fear of difficult tenants is one of the reasons why “accidental” landlords are getting out of the market.

Speaking to the Oireachtas Housing Committee, Tom Dunne said some landlords are “vulnerable” and he said they need support.

He said many are “accidental” landlords who might not be aware of the risks associated with being a landlord.

Mr Dunne said many do not have the money to carry out repairs and he said many landlords were “vulnerable”.

He told the committee that the State needs to look at housing in a broad way and look at how the system interacts with other systems like social welfare and planning.

He said if person rents from a professional landlord such as a REIT (Real Estate Investment Trust) they have a stronger security of tenure than if they rent from a private landlord.

Mr Dunne said a REIT could not recover possession on the basis that it wants a family member to occupy the accommodation.

He said the property investment companies were usually in it for the long term and were not going to sell the property.

He said commercial landlords will be a feature for the future and he said this was happening around the world.

Sinn Féin’s Housing Spokesperson Eoin Ó Broin disagreed, and said he would caution any optimistic views of Real Estate Investment Trusts.

He said there was growing evidence that when REITs purchase properties with tenants living in them, there was greater insecurity because they want to get new tenants into the property to increase the rent price.

He said REITs were in receipt of tax benefits internationally and he said there is growing evidence that their involvement in the rental market can lead to affordability issues.

Concern over Land Development Agency

Experts in the housing sector have raised concerns about the new Land Development Agency, saying it could result in the privatisation of public assets.

The Land Development Agency was set up last September and the Government announced it would build 150,000 homes over 20 years, using State land and private sites.

Up to 60% of the houses built could be for the private market with 30% affordable housing and 10% for social housing.

The Housing Committee is today discussing the Land Development Agency Bill 2019.

Speaking to the committee, Rob Kitchin, Professor at Maynooth University Social Sciences Institute, said legislation underpinning the agency is based on supporting the use of public lands in conjunction with private actors for profit.

Orla Hegarty, an assistant professor in the UCD School of Architecture, said the proposed powers of the LDA are very wide-ranging and removed from direct government controls.

She told the committee that speculative development is potentially the “Achilles heel” of the LDA proposition.

The CEO of the Irish Council for Social Housing, Donal McManus, said the current 10% social housing mandated on Land Development Agency sites is too low.

John O’Connor, Chief Executive Officer, Housing Agency said they would be transferring three sites initially to the LDA in Skerries, Ballbriggan and Naas.

He said that these lands should be retained under public control in the long term.

Mr O’Connor said one of the main objectives is for the LDA to deliver housing on scale to address the housing crisis.

He said this housing needed to be affordable and there needed to be a mixture of housing in the developments.

He told the committee that the developments must be sustainable and the climate change issues taken into account.

Sinn Féin’s Eoin Ó Broin asked the Housing Agency if limiting the LDA to 40% social and affordable housing was correct or if it should be bigger.

In response, John O’Connor said it would be the Agency’s preference that there would be higher levels of social and affordable housing.

He said it should be one-third social housing, one-third affordable rental housing and one-third affordable purchase.

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Activity in construction industry sees first slowdown in 6 years

Activity in construction industry sees first slowdown in 6 years

Activity in the construction sector contracted for the the first time in over six years in September, Ulster Bank’s latest Purchasing Manager’s Index reveals.

The PMI fell to 48.3 in September, a significant drop from 53.7 recorded in August.

Any figure under 50 signals a slowdown in a sector, while a figure over 50 signals growth.

September saw the first contraction in the construction industry since August 2013.

The slowdown was mainly accounted for by a fall in commercial activity, while the housing sector continued to post growth.

Ulster Bank noted that the housing PMI reading of 52.9 was still “comfortably” above the expansion threshold of 50.

It added that housing remained the strongest sub-sector for a ninth month in a row, though the pace of residential activity growth did ease to a four and a half year low in September.

Civil engineering firms posted their 13th consecutive monthly fall in activity, while commercial building decreased for the first time since July 2013, and at a solid pace.

Ulster Bank said that new business growth declined to its slowest pace in over six years as Brexit weighed on customer demand.

It also said the the Future Activity Index remained near August’s nine-year low with concerns about Brexit impacts the key factor affecting sentiment regarding the sector’s prospects for the incoming year.

As well as a smaller rise in new business, employment growth in the construction industry eased to an almost six-year low during September with firms expressing a reluctance to take on additional staff as a result of lower activity levels.

“Recent manufacturing and services PMI survey results have been signalling a deterioration in activity trends in some key areas of the Irish economy in recent months, largely reflecting the combination of weaker
global growth and growing risk of a no-deal Brexit,” commented Simon Barry, chief economist at Ulster Bank.

“The September results of the construction equivalent are suggesting that softer trends in the internationally-traded sectors of the economy are showing signs of spilling over into construction activity,” he added.

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Dublin market heading for big gain on Brexit hopes

Dublin market heading for big gain on Brexit hopes

Dublin’s ISEQ index is on track for its biggest one-day percentage gain this year, soaring more than 230 points (3.7%) this evening, boosted by optimism that a Brexit deal can be reached.

After holding talks yesterday in the UK, Taoiseach Leo Varadkar and British Prime Minister Boris Johnson said they saw “a pathway to a possible deal”.

EU negotiator Michel Barnier and his British counterpart Stephen Barclay, meanwhile, held a “constructive” meeting today, both the British and EU sides said.

Shares in the banks jumped in Dublin this evening with AIB surging more than 13%, while Bank of Ireland was up over 11% and Permanent TSB gained 7%.

Other shares recording strong gains included ICG, Ryanair, Cairn Home sand Dalata Hotel Group.

Irish government bonds also rallied today, outperforming their euro zone peers on hopes that a Brexit deal was in sight.

European markets were also higher this evening, with the Frankfurt DAX jumping 2.3%, while the Paris CAC had gained 1.7% and the London FTSE index was up 0.84%.

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China imports, exports down in September as growth cools

China imports, exports down in September as growth cools

China’s imports and exports fell more than expected in September, official data showed today, as US tariffs and cooling demand at home and abroad hit trade in the world’s second largest economy.

Globally, China’s exports dropped 3.2% in September from the same period last year, while imports dived 8.5%, according to data from the customs administration.

The figures were worse than a Bloomberg forecast, which estimated exports to drop by 2.8% and imports to fall by 6%.

The US is now China’s third biggest trade partner – after the European Union and the Southeast Asian trading bloc ASEAN – with imports from the US down 26.4% in September.

China promised to increase US agricultural purchases in a partial US-China deal announced on Friday, which also includes protections for intellectual property and opening up financial markets.

Engulfed in an impeachment inquiry, US President Donald Trump heralded the deal as a major breakthrough.

But it may only offer a temporary tariff reprieve because it lacks specifics and leaves the thorny issues such as unfair state subsidies to Chinese firms for later, analysts told AFP.

So far, the two sides have imposed punitive tariffs covering more than $360 billion worth of goods in two-way trade.

China’s trade surplus with the US narrowed 3.9% to $25.8 billion in September from $26.9 billion in August.

“We believe that as Sino-US trade negotiations have made progress and we expect further healthy development in bilateral trade,” said Li Kuiwen, a spokesman for Chinese customs.

China’s total trade surplus in September was $39.65 billion.

A major escalation in the trade war last month was “partly to blame” for the weak figures, said Julian Evans-Pritchard, of Capital Economics.

Washington imposed 15% tariffs on more than $125 billion in Chinese imports on September 1, and Beijing retaliated with its own fresh levies.

As a result, “the contraction in exports to the US deepened further, while shipments to the rest of the world held steady”, Evans-Pritchard wrote in a research note.

“With the mini US-China trade deal unlikely to alleviate the main headwinds facing exporters, it will take longer before growth in outbound shipments bottoms out,” he added.

Chinese imports, which declined for the fifth consecutive month amid cooling domestic demand, may also not see a strong recovery, he said.

Pork imports, however, surged 43.6% year-on-year in September after an outbreak of African swine fever decimated pig supplies in the country.

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Irish mortgage rates still higher than euro zone average

Irish mortgage rates still higher than euro zone average

New figures from the Central Bank show that Irish mortgage holders continue to pay the second highest interest rates in the euro zone.

The average interest rate on all new mortgages issued here in August stood at 2.99%, down two basis points since the beginning of the year but up from 2.98% in July.

This compares to the average rate of 1.48% for the euro area – a new record low. Only Greek mortgage interest rates higher than Irish rates in August.

Price comparison and consumer website bonkers.ie said that first-time buyers here are paying over €173 more on average every month compared to euro zone average.

Daragh Cassidy, from bonkers.ie, said that for all the talk of falling interest rates and a mortgage price war in recent months, the average rate in Ireland is down only two basis points since the beginning of the year.

This compares to a fall of over 30 basis points in the euro zone.

Mr Cassidy said there is still a lack of competition in the Irish mortgage market as it remains heavily concentrated in the hands of a few main banks

“Although competition has improved in recent times, it’s still below where it needs to be and this is leading to higher rates. The issue around home repossessions, and the inability of banks to take back a loan that has gone bad, is also a factor,” he added.

Today’s Central Bank figures also show that the volume of new mortgage agreements came to €753m in August.

This brought new home loan agreements for the first eight months of the year to €5.4 billion, up almost 12% on the same time last year.

The Central Bank noted that fixed rate mortgages continued to increase in popularity and accounted for 76% of new mortgage agreements.

The increase brings Ireland closer to the euro area preference for fixed rate mortgages, the Central Bank said.

Meanwhile, the bank also said that interest rates on new household term deposits remained close to zero in August, coming in at just 0.05%, as ECB rates remain at record lows.

The equivalent euro area rate stood at 0.33%.

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Tech tariffs may spark retaliation from China

Tech tariffs may spark retaliation from China

China has signalled it intends to hit back after the Trump administration placed eight of the country’s technology giants on a blacklist over alleged human rights violations against Muslim minorities.

Asked yesterday whether China would retaliate over the blacklist, foreign ministry spokesman Geng Shuang told reporters “stay tuned”. He also denied that the government abused human rights in the far west region of Xinjiang.

“We urge the US side to immediately correct its mistake, withdraw the relevant decision and stop interfering in China’s internal affairs,” Mr Geng said in Beijing.

“China will continue to take firm and forceful measures to resolutely safeguard national sovereignty, security and development interests.”

The White House’s move, announced after US markets closed, came on the same day negotiators from both sides began preparations for Thursday’s high-level talks in Washington.

A US Commerce Department spokesman said the “action is unrelated to the trade negotiations”, and China confirmed vice-premier Liu He would lead the delegation as planned.

Entities on the blacklist are prohibited from doing business with American companies without being granted a US government licence.

This now includes two video surveillance companies – Hangzhou Hikvision Digital Technology and Zhejiang Dahua Technology – that are said to control a third of the global market for video surveillance and have cameras all over the world.

Also targeted were SenseTime Group – the world’s most valuable artificial intelligence startup – and fellow AI giant Megvii Technology, which is aiming to raise up to $1bn in a Hong Kong IPO. Backed by Chinese e-commerce giant Alibaba Group Holding, the pair are at the forefront of China’s ambition to dominate AI in the coming years.

US equity-index futures fell on the news, reversing an earlier gain, while European stocks slipped. US futures also fell after China’s response.

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