Mixed signals for Dublin’s economy as consumer morale dips

Unemployment in the Dublin region dipped in the third quarter of last year and business activity was robust, but a decline in consumer sentiment and high rents cast a shadow, a new report has said.

Property prices are back to levels last seen in April 2009, the Dublin Economic Monitor said, while consumers are more downbeat about their outlook as the impact of the Brexit vote and potential changes in US policy hit sentiment.

However, Austin Hughes, chief economist at KBC Bank Ireland, said a more influential factor was a downgrade of consumers' own personal finances that may reflect pressure on living costs in Dublin.

Employment levels continued to rise, with construction and industry sectors showing significant expansion, and unemployment fell to 7.8 per cent. The private services sector also showed some growth, adding just under 4,000 jobs compared with the previous year. The public sector showed stable employment during the quarter, but showed a 1.2 decline year-on-year.

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Property costs continued to be a concern. Although rents for houses in the capital fell during the three-month period, rents for apartments rose during the quarter. Sale prices were 5.5 per cent higher compared with the same period in 2015.

Indicators

“The latest indicators for the Dublin economy point to a strong performance with growth underpinned by an ongoing improvement in the labour market and robust business activity levels,” said

Lorcan Blake

of DKM Economic Consultants. “However, the downward trend in consumer sentiment and stubbornly high residential and commercial rents are of concern.”

The Dublin Economic Monitor is a joint initiative between the four Dublin local authorities, tracking data from the boom to the economic crash and recovery.

"The Dublin economy, therefore, seems well placed at the start of 2017. Dublin firms continued to see output and new orders rise at faster rates than across the rest of Ireland, but increases outside of Dublin were still robust overall," said Andrew Harker, senior economist at IHS Markit