Economic activity in Dublin continued to grow in the third quarter, but the pace of expansion slowed, new economic data has shown.
Data from the Dublin Economic Monitor pointed to a more challenging start to next year for the capital, as growth in retail spending slowed and business activity also saw weaker expansion.
The Dublin S&P Global Purchasing Managers’ Index (PMI) showed a reading of 53.5, above the 50 mark that separates growth from contraction but marginally weaker than the second quarter’s reading of 54.9. However, it was still ahead of the growth across the rest of Ireland, which was recorded at 50.5 for the three-month period.
The construction sector continued to show strength at 57.3 for the quarter, while the services sector indicated a slowdown, with a reading of 52.6.
Manufacturing continued to contract, although the index rose from 46.6 in the second quarter of the year to 49.4 in last quarter.
Retail spending was up 3.7 per cent year on year, with entertainment a key factor in growth over the last quarter. According to MasterCard data, spending was 0.9 per cent higher quarter on quarter.
Tourism saw strong growth in Chinese and UK markets, but there was a decline in French expenditure of 22.8 per cent, while a 7.3 per cent decline in German spending raised concerns.
Overall, the unemployment rate was broadly unchanged at 5.1 per cent on a seasonally adjusted basis, with employment levels up 1.7 per cent year on year, and down 2.1 per cent on a quarterly basis. The services sector was hardest hit, with reductions in finance, insurance and real estate.
“The year is ending with the economy continuing to demonstrate hard won momentum, particularly in the labour market,” said Andrew Webb, chief economist with Grant Thornton. “A note of caution has emerged in recent data which serves as a reminder that momentum is difficult to maintain in the face of ongoing economic headwinds and a higher interest rate environment. Weakening growth in business activity indicators and consumer spending measures suggest that the start of 2024 could be challenging.”
Foreign direct investment also weakened, falling by a third compared to the prior quarter and down 63 per cent year on year. The numbers of jobs created was also lower, falling 18.6 per cent. However, Dublin still compared favourably with other European cities on investment per capita.
The third quarter also saw a return to growth for residential property prices in Dublin, with prices in the capital up 0.3 per cent month on month in June, gathering momentum to grow to 0.7 per cent by September. But overall, prices were lower year on year, down 2 per cent.
