Paul Murphy (Dublin South West, Socialist Party)
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17. To ask the Minister for Jobs, Enterprise and Innovation his views that an accurate reflection of Irish economic activity that exports Irish-resident companies manufactured abroad are now counted as Irish exports; and his views that this increase in exports will benefit job creation here. [48146/14]

Richard Bruton (Dublin North Central, Fine Gael)
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I understand that the Deputy’s question refers to contract manufacturing. The national accounts show that exports grew by 13.0 per cent year-on-year in the second quarter of this year, with goods exports up nearly 16 per cent. This was not matched by proportionate import growth, despite the growth in domestic demand in the same period. As a result net exports increased by 11.0 per cent year-on-year in the second quarter to stand at €11.2 billion, or 24 per cent of GDP.

Part of the strong performance in goods exports, shown in the national accounts, can be put down to what is known as contracted manufacturing. This contracted production occurs when an Irish-resident (though not necessarily Irish-owned) enterprise contracts a plant abroad to produce a good for supply to a third country. The sale of the good is recorded as an Irish export, as the economic ownership of the good prior to sale is regarded as belonging to the Irish-resident enterprise. Imports used in the production process are also recorded as Irish imports. Neither these exports nor imports associated with contracted production are recorded in the monthly trade series which is based on measurement of when goods physically cross the Irish border.

Contracted production involves very little employment effect or second-round impact on the wider economy and complicates the task of forecasting net exports. Developments in contract production are sector-specific and product-specific and have little relationship with concurrent indicators of export performance. As such, they have the potential to unwind or accelerate with potentially large impacts on measured GDP.

Notwithstanding these developments, there is no doubt that economic recovery has gained momentum this year and that it has broadened to include a recovery in domestic demand. High-frequency data such as retail sales, industrial production and purchasing managers' indices (PMIs) are all in strong positive territory. Employment growth resumed in 2012 and the Live Register continues to fall month-on-month

As stated above, contract manufacturing is not included in the CSO Monthly trade statistics. The latest goods exports statistics released by the CSO shows that exports of goods in October 2014 increased by 4% compared to October 2013, while, for the 10 months period to October 2014, exports of goods increased by 2%, compared to the same period for 2013. Sustainable broad based export-led growth is essential to rebuilding our economy and growing employment. The Government’s Action Plan for Jobs places a specific emphasis on growing opportunities in overseas market.