Dublin Economic Monitor: Brexit and slowing global economy are key challenges for Dublin’s growth
Brexit continues to cast a shadow of uncertainty over the Dublin economy while slowing global growth and increased global trade tensions are also posing downside risks. Dublin Port saw its first annual decline in throughput in Q2 2019 since Q1 2013. Despite this, the economy, particularly the labour market, continues to perform well.
According to the latest Dublin Economic Monitor (DEM) published this morning, the IHS Markit PMI data for the city shows a loss of economic momentum for the third consecutive quarter in Q3 2019 and is now at its lowest level since 2013.
This is being driven by a contraction in Manufacturing activity while the Services and Construction sectors, which are slowing, remain in expansionary territory. The resilience of the dominant services sector will be key to the ability of the Dublin economy to withstand global headwinds.
Amritpal Virdee, Economist, IHS Markit said:
“The Dublin economy has held up reasonably well against a backdrop of widespread uncertainty and slower economic growth both in Europe and at the global level. Whether Dublin can maintain the current expansionary sequence remains to be seen given current levels of Brexit uncertainty and generally weaker demand conditions. Nonetheless, the Dublin economy seems set to meet any future challenges from a position of relative strength.”
THE DUBLIN WORKFORCE CONTINUED TO STRENGTHEN IN Q2
In spite of the slowdown in economic momentum, the Dublin workforce continued to strengthen in Q2 with employment increasing by 11,800 and 717,000 in total now employed in the capital. Accommodation & Financial, Insurance and Real Estate Activities hit all-time highs in Q2, with the latter supported by Brexit relocations. Construction employment also continued its upward trend in Q2.
Commenting on the report’s findings, Neil Gibson, Chief Economist with EY, said:
“Although a global slowdown may be a greater threat to the Dublin economy than Brexit, the city would not be immune to Brexit damage. The weakening of Irish growth and resulting need to provide support to rural Ireland could hamper spending in the city. In addition, Dublin’s position as a tourist gateway presents a further Brexit vulnerability.”
MASTERCARD SPENDINGPULSE™ DATA HIGHLIGHTS DIVERGENCE IN TOURIST SPENDING PATTERNS
The Mastercard SpendingPulse™, published as part of the DEM, shows that overall spending by tourists in Dublin rose by a solid 8.3% yoy in Q3. However, this masks an underlying divergence, which saw tourist spending from the UK (-2.6% yoy) and Germany (-4.2% yoy) contract while spending by visitors from the US (+13.7% yoy) continues to be buoyant.
Michael McNamara, Global Head of SpendingPulse, Mastercard, said on consumer spending:
“Overall retail sales growth in Dublin continued a solid 2019 in Q3 while spending across the rest of Ireland decelerated. Tourism spending from other markets in Europe remain slow in Q3 2019 however USA tourist spending is helping to offset some of that weakness in Dublin.”
DUBLIN ECONOMIC MONITOR – HIGHLIGHTS:
- The latest IHS Markit Dublin PMI data for Q3 2019 (53.0) pointed to the slowest expansion in the index since Q2 2013.
- On an annual basis, Q2 2019 saw the first YoY decline in throughput at Dublin Port since Q1 2013.
- An additional 11,800 were added to the Dublin workforce in Q2 with 717,000 now employed in the capital.
- Passenger trips on the four modes of public transport surpassed 60 million in the third quarter of 2019. Growth on the LUAS cross city continues to rise, accounting for 20% of passenger trips in the city, compared to 18% 12 months ago.
- Average Dublin residential rents stand at €1,713 as of Q2 2019, a further 7.1% increase on the level recorded in the same quarter 2018. Average rents in Dublin, the GDA and nationally all continue to register record highs.
- House building contracted in Dublin in Q2, with negative YoY growth recorded in both completions (-13.7%) and commencements (-18.5%).
- Dublin Property price inflation continues to moderate and entered negative territory (-0.3% YoY) in August 2019, the lowest annual growth rate since October 2012.
- Dublin ranks 5th in the FDI Fintech Locations of the Future 2019/2020.
- Dublin moves up one position to 33rd out of 231 global cities in the Mercer Quality of Living report.