Economic activity in Dublin is beginning to slow down, the latest Dublin Economic Monitor has shown, as inflation and the global downturn start to have an impact.
Although the Dublin S&P Global Purchasing Managers’ Index (PMI) for the third quarter showed some growth, it recorded only 50.4, which is just above the 50 mark that separates expansion from contraction. That was driven by the services sector, which had a reading of 52.5, making up for contractions in activity in both the construction and manufacturing sectors.
The value of retail spending by consumers in Dublin continued to grow in the third quarter, but that rise was largely fuelled by inflation, and volumes of products sold were lower. Spending rose by 1.3 per cent quarter on quarter and 6.5 per cent year on year. Meanwhile, tourist spending was only 0.4 per cent higher, below expectations for the late summer season.
However, passenger numbers at Dublin Airport recovered in the third quarter, with the opening of the new north runway contributing to growth of almost 13 per cent. That brought the total number of passengers at the airport to 7.9 million in the quarter.
Public transport usage also continued to recover, with passenger numbers up 11.6 per cent quarter on quarter.
The labour market remained strong, but the unemployment rate was up 0.4 percentage points to 4.9 per cent. That was partially attributed to a 2.3 per cent loss in the private services sector, which includes the recent losses in the tech sector.
In the housing market, new commencements and completions plateaued, while prices grew at a slower rate of 1.4 per cent month on month and 9.6 per cent year on year. Average rents were 1.8 per cent higher in the quarter, matching peak levels of more than €1,863 per month.
“A mixed economic picture has emerged this quarter with some indicators such as the PMI showing manufacturing and construction in contraction mode while services remain in growth territory,” said Andrew Webb, chief economist with Grant Thornton.
“The economy feels like it has entered ‘wait and see’ mode as business and consumer sentiment reflects the uncertain and inflationary environment that has gripped economic performance this year. While growth is expected to continue in 2023, the pace of that growth will be much slower than in previous years.”