Mr. Shane Enright:

I will take the members through a number of slides which touch on developments in domestic demand as well as exports in the first half of this year. As the members can see, the slide on the screen shows growth in retail sales over the last 12 months. It has been positive for all but one of the months in the period. I have broken down the contributions to the strength of retail sales down to show the effect of the motor trade and that of core retail sales, which is everything else. For the first seven months of the year, retail sales were up approximately 7% over the same period last year. Approximately half of that effect comes from core retail sales and the other half from strength in the motor trade. We heard today that the number of vehicles licensed to the end of September is up around 30% compared to the same period in 2013. From looking at the numbers, it seems the 142 effect is stronger than the 132 effect was last year. Car sales are still well below the levels we saw in 2007. A view as to the equilibrium numbers of new car sales is important for making GDP forecasts, tax forecasts and excise forecasts over the next number of years. Our view is that the equilibrium number of car sales is probably still higher than the number that will be recorded this year, despite the growth we have seen over last year's levels.

The next slides shows strength in investment over the course of the last number of quarters. I will break this down into the two most economically relevant components in terms of performance of the public finances and the labour market. The light green bar on the slide shows year-on-year growth in core machinery and equipment. That has been in very strong territory since the start of 2013. It reflects business investment in items such as plant, machinery and vehicles and demonstrates renewed confidence at firm level about prospects and investing to replenish capital stock. The year-on-year growth rate has fallen back a bit but is still in strong and positive territory, at nearly 22% in quarter 2. The other aggregate I have highlighted there is building and construction activity on an expenditure basis. In year-on-year terms, it has grown by approximately 10% in the first half of the year. While that is encouraging, it is from a very low base. The contraction in building and construction activity between 2006 and 2012 was of the order of three quarters. Strong growth is still off quite a low base compared to where we were in the past.

Turning to the external side, we have had a very strong rebound in goods exports in the first half of the year, up 16% in the second quarter.