Business activity returns to growth in Dublin in Q3 but faces further challenges

Business activity returns to growth in Dublin in Q3 but faces further challenges

The latest Dublin PMI from IHS Markit, produced for Dublin City Council, shows business activity in Dublin returned to growth in Q3, following the steep contraction caused by COVID-19 and the associated lockdown measures in Q2.

However, the overall increase to 51.2 indicates marginal growth as the rebound lost steam at the end of the quarter.

Manufacturing registered the strongest recovery of the three monitored sectors, followed by construction while the service sector continued to face challenging conditions. This is particularly true for the hospitality and leisure sectors which are bearing the brunt of the restrictions.
Employment contracted for the second consecutive quarter as companies remained reluctant to expand their workforces. However, the fall in staffing levels was only slight and much softer than that seen in the previous quarter.

Renewed restrictions in Dublin in September saw new orders continue to contract in the capital, albeit at a slower pace than in Q2. This is in contrast to the Rest of Ireland where new orders returned to growth in Q3.

Weakening demand driven by the 2nd wave of COVID-19 restrictions and increasing uncertainty surrounding Brexit will see the environment for businesses in the capital and across the country remain severely challenged in Q4.

Commenting on the PMI, Andrew Harker, Economics Director at IHS Markit said:

“While the Dublin PMI signalled a rebound in business activity in Dublin during the third quarter of the year, measures of new orders and employment were less positive and therefore are a cause for concern. Even on activity, the expansion in the capital was marginal and weaker than that seen across the Rest of Ireland, as the particular issues associated with COVID-19 in big cities hit firms in the capital.

“With pandemic restrictions now being tightened again, the fourth quarter looks set to provide further challenges for companies and puts into doubt the ability of the local economy to recover quickly.”

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