Dublin's economy has stagnated for the first time in 18 months when businesses were floored by Covid-19 restrictions, according to Dublin City Council's economic monitor.
The capital's economy had grown for 18 consecutive months, but recorded a decline in quarter four of 2022. A survey of business activity during the final three months of last year shows both manufacturing and construction sectors posting reductions in output.
However, the robust services sector softened the blow and continued to record a solid increase in activity. Overall, Dublin's headline rate dipped from 50.4 to 49.9. A reading above 50 indicates an overall expansion in activity while below 50 is an overall contraction.
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A Dublin City Council spokesperson explained: "Looking forward, the New Orders measure signals potential economic hardship in 2023. At 48.1, New Orders in the capital contracted in Q4, which outside of Covid restricted times is the first decrease since 2012.
"The Rest of Ireland also recorded a decrease in New Orders, albeit at 49.2, it was softer than seen in the capital. These New Order trends are concerning as the effects of interest rate hikes will likely only begin to be felt in the quarters to come."
However, the PMI survey from S&P Global highlighted that the capital's labour market trends remained resilient in Q4 as Dublin businesses increased their staffing levels for the eighth consecutive quarter.
"At 52.3 the rate of job creation was solid, but it had slowed to the weakest level since Q1 2021," the spokesperson said. "Employment also increased across the Rest of Ireland, but at a slower pace."
The spokesperson finished by warning that "trends in new orders suggest that activity will remain constrained in the coming quarters."
Andrew Harker, Economics Director at S&P Global Market Intelligence said: "Dublin firms are feeling the pinch at present as waning demand acts to limit business activity both in the capital and across the Rest of Ireland as well.
"Growth in the service sector was cancelled out by falling activity across manufacturing and construction in the final quarter of 2022. On a more positive note, however, firms are still taking on extra staff, perhaps hoping that any soft-patch will prove to be short-lived.”
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