Quarterly National Accounts Quarter 1 2024 Final

Introduction

This release gives the official quarterly national accounts estimates for Ireland. It provides an updated set of results for quarter 1 of 2024 (Q1 2024 Final).

National accounts are compiled in the EU according to the European System of National and Regional Accounts (ESA 2010) framework. In 2014, the new ESA 2010 framework replaced the previous ESA 95 version and all EU member states were required to adopt ESA 2010 by September 2014. ESA 2010 is the European version of the current UN mandated international standards for national accounts statistics, the System of National Accounts (SNA) 2008.

The aggregates shown have been derived from a wide variety of sources. As some of the available sources are of lesser reliability than those used for the annual national accounts, the quarterly estimates given in this release have a higher margin of error than the annual figures.

Updates

Figures for previous quarters have been updated and realigned with the latest annual estimates for 2023 and earlier years also being published today in Annual National Accounts 2023 results (ANA 2023).

Nace Classification

In compliance with EU regulations the Nace Rev. 2 classification system is used in Tables 2.2, 2.3, 2.4 and 2.5. The Nace Rev. 2 system corresponds with the UN International Standard Industrial Classification (ISIC Rev 4). (The national classification system that was used up to and including the Q4 2011 QNA results that were published in March 2012 was replaced with the Nace Rev. 2 classification system in the Q1 2012 results published in July 2012).

The results for the economy are shown for 10 sectors (Nace A10) at Basic Prices. The contents of the sectors conform to the Nace Rev. 2 system. The “Publishing” and “Software” industries are classified in the sector “Information & Communication.”

Tables 2.2, 2.3, 2.4 and 2.5 show a full A10 breakdown that replaces the five sectors used up to QNA Q4 2016. The correspondence with the relevant sections of NACE Rev.2 is shown in Table 8.1.

Current Price

For the annual accounts, GDP at current prices is calculated using two independent approaches i.e. the income and expenditure methods. Since the Q1 2018 reference quarter results published in July 2018, GDP at current prices has been calculated using two independent methods, namely current price output and current price expenditure. The output estimates in current prices are supplied in Table 2.2; the expenditure estimates in current prices are supplied in Table 3.2.

Volumes

At constant prices, two measures (output and expenditure) are similarly used. In addition, constant price Compensation of Employees data are compiled. These measures are produced using annual chain linked indices. On the output side, for each quarter, the volume growth measures at a detailed level are weighted together using value added weights of the previous year. Similarly, on the expenditure side, the growth estimates are weighted by expenditure weights of the previous year. The average of the two measures is the growth measure used. The change over a period of years is then calculated by linking together the annual changes. The estimates in this release are referenced to 2022 values. A consequence of this method is that the individual components of GDP at reference year values do not add to the total. The output estimates in constant prices are supplied in Table 2.3; the expenditure estimates in current prices are supplied in Table 3.3.

Definitions

Gross Domestic Product (GDP) represents the total value added (output) in the production of goods and services in the country.

Net factor income from the rest of the world (NFI) is the difference between investment income (interest, profits etc.) and labour income earned abroad by Irish resident persons and companies (inflows) and similar incomes earned in Ireland by non-residents (outflows). The data are taken from the Balance of International Payments statistics in the International Accounts that are based on the BPM6 framework. The components of interest flows involving banks in the Net factor income item in the national accounts are constructed on the basis of “pure” interest rates (that is exclusive of FISIM). Under BPM5 based Balance of International Payments data released previously, this FISIM adjustment was not carried out. However, under the BPM6 framework introduced in 2014, FISIM is now being treated as part of financial services, rather than income, bringing it into line with the treatment of FISIM in national accounts statistics. The deflator used to generate the constant price figures is based on the implied quarterly price index for the exports of goods and services. In some years exceptional income payments have had to be deflated individually.

Gross National Product (GNP) is the sum of GDP and NFI. Because NFI is the difference between two large gross flows, its magnitude can fluctuate greatly from one quarter to another. This can lead to significant differences between the GDP and GNP growth rate for the same quarter.

National Accounts Explained

The National Accounts Explained section on the CSO website provides a clear and helpful guide to the terms used in National Accounts to help users to make the most of the macroeconomic outputs. Terms like GDP, GNI and modified GNI are explained, for those who are unfamiliar with them or new to the accounts. It also delves into some of the technicalities of the accounts like FISIM and imputed rent.

Methodology

Table 2.2 and 2.3: Output Measure

The estimation procedures are similar to those used for the annual accounts whenever possible. However, in a number of cases the annual methodology cannot be followed due to the lack of relevant data quarterly.

Agriculture, Forestry and Fishing

The estimate for Agriculture is calculated by using the available sub-annual information for exports and slaughterings of animals, milk deliveries, stock changes (six-monthly), fertiliser and feeding stuffs usage etc. For some items, annual figures are distributed equally across the quarters. Monthly sea fish landings are used to estimate the quarterly output of fishing.

Industry

The gross value added of manufacturing industry is calculated by applying monthly volume of production indices to the previous year's quarterly gross value added, including royalties. Royalties are separately deflated using the export price index and then deducted.

Construction

Changes in the volume of investment in construction projects are used to estimate the output of the building and construction sector.

Distribution, Transport, Hotels & Restaurants

For distribution the methods used are similar to those used for the annual calculation. They rely heavily on the retail sales indices and other CSO services inquiries. In the case of transport, most of the output measures used for the annual calculations are available on a quarterly basis.

Information and Communication

For communications the main data sources are direct inquiries to the service suppliers, with additional data and trend estimation for some residual components.

Public Administration, Education and Health

The quarterly estimate of value added for public administration and defence, education and health sector has been calculated based on the employment trends in the various elements of the sector.

Financial and Insurance Activities, Real Estate Activities, Professional, Admin and Support Services and Arts, Entertainment and Other Services

The remaining services categories cover a variety of service activities, some of which are surveyed on a quarterly basis by the CSO. For some services, information on outputs is not directly available on a quarterly basis. In most of these cases, quarterly estimates are derived using trends in related indicators. In a small number of residual cases, annual estimates are distributed equally across the quarters.

Product Taxes and Product Subsidies

Taxes and subsidies are deflated at a detailed level using appropriate price indices. Value added taxes and excise duties have been accrued and recorded in the period in which the underlying expenditure took place.

Net factor income from the rest of the world (NFI)

The value of net income flows with the rest of the world in the Quarterly National Accounts release is generally consistent with the published Balance of International Payments statistics in the International Accounts.

Tables 3.2 and 3.3: Expenditure Measure

The various components of the expenditure-based measure of GDP are defined in the Annual National Accounts publication. The methods used for the quarterly series are similar to those used for the annual where possible but in many cases alternative methods have been applied.

Personal Consumption Expenditure is estimated using CSO data, such as the Retail Sales Indices together with some direct inquiries. Administrative data sources are used for some goods such as fuel and power products and motor vehicles. Constant price estimates are obtained using components of the Consumer Price Index (CPI).

Net Expenditure by Central and Local Government at current market prices is estimated using Government records. From Q2 of 2009 it is calculated net of the public sector pension levy introduced in March 2009. The constant price estimates of remuneration are derived by extrapolating base year estimates using an index of employment or using appropriate deflators for wages and are unaffected by the pension levy which is treated as a reduction in wage rates. Expenditure on goods and services is deflated partly by consumer price indices and partly by wholesale price indices.

Gross Domestic Fixed Capital Formation at current market prices includes expenditure on building and construction work and machinery and equipment. The quarterly estimates of dwellings are based on data from the CSO’s New Dwelling Completions quarterly releases. Information on other building and construction is based on the CSO’s quarterly index of production in Building and Construction. Quarterly estimates of commercial vehicles used in the business sector are estimated using administrative data. Estimates of other machinery and equipment and R&D (included under ESA 2010 standards) are made by reference to import statistics and the CSO Quarterly Capital Assets in Industry Inquiry. Current estimates are deflated to prices of the previous year using appropriate price indices such as components of the Wholesale Price Index (WPI) and indices for construction activity.

Value of Physical Changes in Stocks at current prices covers stock changes in the agricultural, industrial and distribution sectors and in intervention stocks. This item measures the actual value change in stocks between the beginning and end of quarter adjusted for any changes in the prices of the underlying commodities. Data on industrial and distribution stocks are taken from published and unpublished components of the CSO Quarterly Stocks Inquiry. Agricultural stocks are estimated from the results of CSO’s agricultural enumerations and statistics on animal slaughterings, etc. Constant price estimates are calculated by deflating the current estimates using relevant price indices and price data on agricultural and intervention stocks. Some adjustments have been made to the stocks values to improve the coherence of the quarterly accounts. These are judgmental adjustments to allow for within-year timing differences between the output and expenditure measures. Over a calendar year, these adjustments are neutral. Value of Physical Changes in Stocks also includes net acquisitions of valuables which are estimated using CSO Trade data.

Exports and Imports of Goods and Services at current prices are taken from the CSO Balance of International Payments series of the International Accounts. Current price estimates are converted to previous year prices using the available price indices, including export and import unit value indices. 

Foreign and Domestic Gross Value Added (GVA) at Constant Basic Prices Nace Rev 2

Chapter 6 of this release provides gross value added at current basic prices and constant basic prices (chain linked and referenced to 2022) for the economy divided into two sectors, namely

(a) the economic sectors dominated by Foreign-owned Multi National Enterprises (MNEs)

and

(b) all other remaining sectors.

GVA at basic prices is measured as the difference between output at basic prices and intermediate consumption at purchasers’ prices.

The sectoral data underlying the aggregates in the release are the same as those used for

1. Annual National Accounts 2023 (ANA 2023) Tables 5.1, 5.2 and 5.3 (in CSO PxStat Table NA018) which were published in July 2024 in tandem with QNA Q1 2024 Final

and

2. Annual National Accounts 2023 (ANA 2023) Table 3.6 (CSO PxStat Table NA006, which gives a breakdown of the economy at Constant Basic Prices by 10 principal economic sectors (Nace Rev.2 A10) and ANA Table 5.5 (CSO PxStat Table NA017) which illustrates a 37 sector breakdown of the Irish economy.

The correspondence with the relevant A10 sections of NACE Rev.2 is as follows:

For the Foreign-owned MNE dominated sector and ‘Other’ sector variables set out in Tables 6.2 and 6.3 of this release, Table 8.2 below ‘Nace classification of sectors dominated by Foreign-owned Multi National Enterprises (MNEs)’ shows the correspondence with the relevant ANA and Nace Rev. 2 A10 sectors. Foreign-owned Multinational Enterprise [MNE] dominated sectors occur where MNE turnover on average exceeds 85% of the sector total.

Compensation of Employees

Compensation of employees is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done. Compensation of employees is made up of the following components: (a) wages and salaries and (b) employers’ social contributions. Wages and salaries in cash include gross pay including overtime, bonuses, commission, tips, holiday pay and allowances. Wages and salaries in kind include free or subsidised canteens, discounts on company products, company car, car parking, free travel, gym membership, child care for the children of employees, bonus shares and loans to employees at reduced rates of interest.

The quarterly estimates make use of the employee earnings data in the Revenue Commissioners' PAYE Modernisation (PMOD) dataset since Q1 2019. This allows more timely information on compensation of employees than before 2019. Prior to this, annual estimates based on Revenue Commissioners' P35 annual earnings data, are temporally disaggregated using information on earnings and employment from the CSO's Labour Force Survey (LFS) and Earnings, Hours and Employment Costs (EHECS) quarterly surveys. Information on employers' social contributions on behalf of their employees, such as PRSI and pension contributions, is also available from the PMOD and P35 datasets.

Seasonal Adjustment

Seasonally adjusted aggregates can be computed either by aggregating the seasonally adjusted components (indirect adjustment) or adjusting the aggregate and the components independently (direct adjustment). In this publication, seasonal adjustment is conducted using the indirect seasonal adjustment approach. This approach is in line with CSO’s Policy on Seasonal Adjustment and Eurostat’s Recommendations on Seasonal Adjustment. The indirect approach can give the best results when the component series show very different seasonal patterns, which is a feature of some data series in the Irish National Accounts. Under this indirect approach, individual time series are independently adjusted at the component level. These individual series are then aggregated to compute seasonally adjusted results for GDP, GNP etc. This indirect approach is applied to GDP and GNP and the seasonally adjusted GDP and GNP are derived as the sum of the seasonally adjusted components (such as Personal Consumption, Exports etc.). Once the statistical discrepancy is taken into account, the sum of the seasonally adjusted components of GDP and GNP add up to the respective seasonally adjusted GDP and GNP series. As part of the seasonal adjustment process using the US Census Bureau’s X-13-ARIMA framework, ARIMA models are identified for each series based on unadjusted data spanning Q1 1995 to Q1 2024 Final. These models are then applied to the entire series (Q1 1995 to Q1 2024 Final). Seasonal factors and the parameters of the ARIMA models are updated each quarter.

COVID-19 note

Seasonally adjusting the Quarterly National Accounts will be challenging until the full scale and shape of the impact COVID-19 has on the time series is better understood. Based on Eurostat guidance, Q1, Q2, Q3, Q4 2020, Q1, Q2, Q3, Q4 2021, Q1 2022 Final, Q2 2022, Q3 2022, Q4 2022, Q1 2023 Final, Q2 2023, Q3 2023, Q4 2023 & Q1 2024 Final have been modelled as additive outliers (AO) which will be reviewed as required. We have tested the data and treated Q1, Q2, Q3, Q4 2020, Q1, Q2, Q3, Q4 2021, Q1 2022 Final, Q2 2022, Q3 2022, Q4 2022, Q1 2023 Final, Q2 2023, Q3 2023, Q4 2023 & Q1 2024 Final as additive outliers for certain sectors and other contributing elements to the accounts but not all. This treatment for seasonal adjustment reflects the volatile nature of economic sectors experiencing a greater COVID impact, such as the retail and wholesale sectors, and will be kept under review going forward as required. Users should be aware that as further data observations become available in the months and quarters ahead, revisions to the seasonal adjustment models may result in revisions to the quarterly seasonally adjusted series.

The adjustments are completed by applying the X-13-ARIMA model, developed by the U.S. Census Bureau to the unadjusted data. This methodology estimates seasonal factors while also taking into consideration factors that impact on the quality of the seasonal adjustment such as:

• Calendar effects, e.g. the timing of Easter,
• Outliers, temporary changes and level shifts in the series.

For additional information on the use of X-13-ARIMA see US Census Bureau information on X-13ARIMA-SEATS Seasonal Adjustment Program.