Latest Dublin Economic Monitor shows slowing rates of growth

The latest Dublin Economic Monitor, published this morning by the four Dublin Local Authorities, shows that despite positive movements in the labour market, overall business activity in the Capital slowed at the end of 2023.

The Dublin S&P Global Purchasing Managers’ Index (PMI) slowed to 51.9 in Q4, its lowest level of the year.

This exceeded the 50 mark which separates expansion from contraction but was down from 53.5 in Q3.

This slowdown was driven by activity levels in the construction sector swinging sharply from a robust expansion in Q3 (57.3) to contraction in Q4 (45.4).

This brought a sequence of three quarters of expansion to an end.

The overall positive reading in Q4 was driven by the services (53.9) and manufacturing sectors (53.3).

Dublin’s unemployment rate fell to 4.7% (SA) in Q4 in a further positive development for the Capital’s labour market.

This represented a 0.4 percentage point reduction QoQ, and brought the rate below 5% for the first time in a year and back in line with the equivalent for Q4 2022.

Both the Dublin and national rates (4.5% SA) were close to ‘full employment’ and indicated rude health as 2024 approached, despite headwinds in the global economy.

According to MasterCard data, consumer spending in Dublin increased by 0.9% QoQ and 3.4% YoY which was broadly in line with the growth rates recorded in the preceding quarter.

The Entertainment sector (hotels, bars and restaurants) was the main driver of QoQ growth in the Capital with an expansion of 2.4%.

This was followed by Necessities (+1.5%) and Household Goods spending (+1.3%).

Tourism spending contracted in the quarter, however, in what was a disappointing conclusion to the year.

While expenditure increased by 5.7% YoY, it contracted by 1.7% QoQ marking the first such reduction since early in the pandemic.

The US market – critical to tourism across the country – continued on an unsteady path with a contraction of 16.4% QoQ, after an expansion of almost a quarter in Q3.

Hotel occupancy rates in Dublin rebounded strongly in December 2023 and January 2024, following a relatively weak period between May and November of last year.

Occupancy climbed to 83.9% (SA) in December and then surged to close to 91% (SA) in January.

This was the highest level since the series began in 2014 and is a positive for the industry, which has faced multiple challenges in recent years.

Notably, the January uptick in occupancy coincided with Average Daily Rates reaching their lowest ebb (€160, SA) in 20 months.

2023 was a record year for public transport usage as 251 million journeys (non-SA) were undertaken in the Capital, up by 48 million or 23% YoY.

A total of 63.5 million passenger journeys (SA) were recorded across the four main transport modes in the final quarter of the year.

While this was below the peak of 64.1 million (SA) recorded in Q2, it represented growth on both QoQ (+2.4%) and YoY (+6.1%) bases.

Dublin Bus was the main source of the quarterly growth with an expansion of 1.33 million journeys or 3.3%.

Commenting on the DEM’s findings, Andrew Webb, Chief Economist with Grant Thornton, said:

“Getting a clear read on the economy is proving elusive at the moment.

“This edition of the monitor reflects this challenge, noting a mixed picture across different indicators.

“We have new peaks for hotel occupancy and a faltering demand for restaurants, reasonable retail performance but weakening business activity and we continue to see strong employment statistics but fewer vacancies.

“All things considered, the domestic economy has recorded growth, and is expected to continue doing so, but weak external demand is dampening the pace of expected growth.”