In the second quarter of the year, business activity in Ireland, as indicated by the latest PMI survey from S&P Global, continued to grow, albeit at a slower pace compared to Q1. The headline rate stood at 54.9, down from the beginning of the year’s 55.5. While the Manufacturing sector experienced a decline (46.6), both Services (56.8) and Construction (58.7) demonstrated significant growth, with the latter exhibiting the most pronounced increase since Q1 2022. The rest of Ireland (51.4) also saw a rise in activity, albeit to a lesser extent than in the capital.
Despite the moderation in the rate of growth, the New Orders* measure remained robust at 54.8, marking the second consecutive quarter of strong expansion. The Rest of Ireland also witnessed an increase in New Orders, reaching 52.8. This expansion in new business reflects the ongoing resilience of the Irish economy, despite inflationary pressures and tightening monetary policy.
On the employment front, Dublin staffing levels (51.8) continued to rise for the tenth successive quarter, although the rate of growth was the weakest since Q1 2021. Notably, job creation in the rest of Ireland (53.7) surpassed that in Dublin for the first time since Q2 2021.
While business activity in Dublin and Ireland as a whole maintained an upward trajectory in Q2 following a strong start to the year, signs of softening activity emerged, particularly regarding job creation in the capital. Although inflationary pressures have been gradually easing, they remain present, and the full impact of global interest rate hikes has yet to fully manifest. As a result, a more subdued outlook is anticipated for the second half of the year.
Business Activity Continues to Increase
Commenting on the PMI, Laura Denman, Economist at S&P Global Market Intelligence said:
“The midpoint of 2023 saw the economic trends amongst Dublin private sector firms soften somewhat. While still marked overall, upturns for activity and new orders eased from the previous quarter and employment growth was the least pronounced in over two years. In line with themes seen for the Rest of Ireland and indeed globally, manufacturers have found it increasingly difficult to generate new orders over the past year or so while service providers continued to benefit from the release of pent-up demand following the COVID-19 pandemic.”
*What is New Orders measure?
The New Orders measure refers to a key component of the PMI (Purchasing Managers’ Index) survey, which assesses the level of new orders received by businesses. It provides insights into the demand for goods or services in a specific sector or economy. A higher New Orders reading suggests an increase in demand and potential future business activity, while a lower reading indicates a decline in new orders. This measure is closely monitored as it offers valuable information about the growth or contraction of an industry or economy.
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