Good afternoon, it is March 3rd 2021 and here is your economic and market update from BlackBee.
- Lockdown takes toll on tax take.
- AIB services PMI shows Irish services hit harder than UK and European counterparts.
As spending on pandemic related supports rose and tax receipts fell, public finances fell deeper into the red last month. Published by the Department of Finance, the Governments budget deficit on a 12 month rolling basis increased to over €14 billion in February (or approximately 3.9% of GDP based on ERSI forecast for 2020 annual GDP). The exchequer recorded a deficit of €12.741bn in January which would have been approximately 3.6% of GDP. Tax receipts for the first two months of 2021 were €8.4 billion, down €828 million (9%) from the same period last year. Income tax receipts were marginally up, standing at €4 billion, in comparison to the same period last year while VAT returns were significantly lower reflecting the current lockdown. The Department of Finance said that February was a non VAT due month so the fall off reflected “the substantial decline seen in January”. Total gross voted expenditure to the end of February was €12.3 billion, €2.1 bn (20.5%) higher than the same period in 2020 and €356 million above department expectations. The Governments Employment Wage Subsidy Scheme (EWSS) and the Pandemic Unemployment Payment (PUP) were the biggest areas of spending. (Source: Irish Times).
According to the latest Services Purchasing Managers Index (PMI) from AIB, business activity and new work both continued to decline. Although they continued to decline, the pace of decline was slower than January. The service sector spans from bars to hotels to banking and is the biggest contributor to the country’s economy. The index rose from 36.2 in January to 41.2 in February. A reading above 50 is expansion and a reading below 50 shows contraction. AIB chief economist Oliver Mangan said “the Irish reading of 41.2 is well below the corresponding flash February PMI figures of 49.7 for the UK and 44.7 in the eurozone, pointing to a more extensive lockdown here”. Confidence among businesses was noted to improve with firms expecting a revival once restrictions are lifted and a further roll out of vaccines. (Source: Irish Independent).
Best & Worst Performers of Large Cap US Stocks on Tuesday
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Global Market Update
(as at close of markets 02/03/2021)