The latest Dublin Economic Monitor (DEM) by the four Dublin Local Authorities shows many of the capital’s key economic indicators are in positive territory – most notably in business activity, consumer spending and the labour market.
A new indicator from fDi Markets shows that Foreign Direct Investment (FDI) in Dublin continued to grow in Q1 2023. Over $520 million in capital investment occurred across 20 projects in the Capital in the quarter, with the creation of almost 1,300 jobs (all values SA). Investments in the Capital in Q1 compared favourably to a selection of other European cities, ranking 2nd to Amsterdam for both FDI per capita ($655, SA) and average project value ($26.2 million, SA).
The Q1 2023 Dublin S&P Global Purchasing Managers’ Index (PMI) soared back into expansion in the first quarter of 2023 with a reading of 55.5, comfortably exceeding the 50 mark which separates growth from contraction. Expansions in the services (57.4) and construction sectors (57.3) more than outstripped a contraction in the manufacturing sector (46.6) in Q1. New orders levels, which are an indicator of businesses’ project pipelines, also expanded at a strong rate (55.2) – along with employment which rose for a ninth consecutive quarter (55.0).
According to MasterCard data, the value of retail spending by consumers in the Dublin economy continued to expand in the early stages of 2023 with Q1 growth of 1.6% QoQ and 5.8% YoY (SA). The QoQ expansion in spending was driven by increases in expenditure across all segments covered in the MasterCard SpendingPulse. Spending on Necessities grew rapidly in Q1 (+3% QoQ) in what is likely a reflection of stubbornly high inflation rates for foodstuffs. Lower, but nonetheless positive, growth rates in spending patterns were recorded in the Entertainment (+2% QoQ) and Household Goods (+1.5% QoQ) categories.
Dublin’s unemployment rate ticked upwards in Q1 2023, yet remained at or close to ‘full employment’. The 5.1% rate (SA) was up by 0.4 percentage points (pp) QoQ but down by 0.7pp YoY. Over 781,400 Dublin residents (SA) were in employment in Q1, representing growth of 1.2% QoQ (+9,600 jobs) and 3% YoY (+22,800 jobs). Private services and public sector employment were the sole drivers of the YoY growth, with expansion rates of 5.2% and 1.9% respectively.
Residential property prices in the Capital declined for a sixth consecutive month in March 2023. Prices declined by 0.9% MoM, likely as a result of tightening credit conditions hampering buyers’ purchasing power. Meanwhile, new residential supply to the Dublin market rose YoY in the quarter. Over 2,700 new units were started in Q1, representing a YoY growth rate of 48.1% (+892 units). Housing completions in Dublin also rose significantly YoY with growth of 27.6% or 571 units (SA).
Commenting on the DEM’s findings, Andrew Webb, Chief Economist with Grant Thornton, said: “With inflation seemingly loosening its grip over the economy, consumer confidence is building. Business activity in the Capital has soared back at the start of this year, adding further belief that the economy is moving into a more settled phase.”