Covid restrictions continue to hit Dublin economy
The latest Dublin Economic Monitor shows that although the Dublin economy remains severely impacted by Covid-19 restrictions, it is prepared for recovery once conditions permit.
The monitor is published by the four Dublin Local Authorities – Fingal County Council, Dublin City Council, South Dublin County Council and Dún LaoghaireRathdown County Council.
The latest Dublin IHS Markit Purchasing Managers’ Index showed a decline in business activity in the fourth quarter of 2020 as both new orders and employment levels reduced.
The services sector was the main contributor to this decline with its PMI dipping to 48 in the quarter, critically falling below the 50 mark which separates growth from contraction.
The overall PMI for Dublin stood at 49.2, down from 51.2 in the third quarter of last year.
Data from MasterCard shows that retail spending in Dublin fell by 4.8% on a quarterly basis in the three months from October to December, but remained 1% above the same quarter in 2019.
The main driver of this annual increase was eCommerce, which rose by 44%. But both Entertainment and Discretionary spending remained at exceptionally low levels compared to the previous year with drops of 70.1% and 47.2% respectively.
Meanwhile, hotel occupancy fell to 16% in January as the average daily rate for a room declined to €88.
Today’s monitor also revealed that the labour market in the capital continued to be decimated in late 2020 and into 2021.
Employment levels among Dublin residents fell to below 692,000 in the fourth quarter of 2020 with especially sharp contractions in the services and construction sectors as a result of further Level 5 restrictions.
Pandemic Unemployment Payment recipients swelled to over 148,000 in January as restrictions continued, while the latest data from Indeed shows that job postings in Dublin remained over 30% lower in February.
Today’s monitor also showed that transaction levels remained low in the Dublin housing monitor, while prices continued on an upward trajectory at the tail end of 2020.
It noted that house completion levels reached a new peak in the last three months of 2020, though there is evidence that supply in the form of commencements is drying up.
On transport, the monitor showed that travel around Dublin continued to be significantly affected by the pandemic.
Public transport usage was down by over 57% in the fourth quarter of 2020, while traffic volumes on eight main thoroughfares in Dublin dropped by 41% on an annual basisi in February.
Dublin Airport passenger volumes plummeted by over 91% to 720,000 in the last quarter of 2020.
But Dublin Port’s throughput levels surged to over 10 million tonnes in the quarter as both imports and exports increased substantially with Brexit stockpiling and online retailing likely driving this.
Andrew Webb, chief economist with Grant Thornton, said that Dublin’s economic fortunes now feel exclusively wedded to how fast the vaccine rolls out.
“It is unsurprising, given the restriction levels in place over this recent quarter, that many indicators in this Economic Monitor have moved sharply in the wrong direction,” Mr Webb said.
“However, hope comes from the evidence of sharp increases in activity that followed previous easing of restrictions as this points towards pent up demand and an economy that will move swiftly through the gears to regain lost ground. A recovery is certain but the timeline, unfortunately, is not,” the economist added.