Latest Dublin Economic Monitor records collapse in economic activity

The deep and widespread economic implications of Covid-19 for the Dublin economy are demonstrated in the latest Dublin Economic Monitor (DEM), published this morning by the four Dublin Local Authorities.

Activity across the Dublin economy collapsed in the second quarter of 2020 as measures to limit the spread of Covid-19 had severe implications for residents, businesses and visitors alike. Employment levels decreased by over 33,000 YoY, business activity contracted at record rates, while usage of Dublin’s airport, port, and public transport system all fell substantially.

Dublin’s IHS Markit Purchasing Managers’ Index (PMI) captures the impact of the restrictions for businesses in the Capital. The PMI fell to 25.2 (where 50 = no change), signifying the severe contractions which occurred across manufacturing, services and construction in the quarter. The declines in output and new orders during Q2 exceeded those seen during the worst of the global financial crisis. Services were particularly affected, likely due to the importance of the sector for economic activity in the Dublin region.

Weak business activity was further reflected in the office market where vacancy rates increased in Q2, while public transport usage declined by over 76% YoY as a combination of travel restrictions and remote working reduced residents’ and visitors’ movements.

Passenger throughput at Dublin Airport fell by over 98% YoY in Q2 2020, and this had severe implications for the tourism and hospitality sectors in particular. Hotel occupancy rates fell as low as 5.9% in the second quarter as domestic and international travel restrictions limited visits to the Capital. Such low demand for hotel rooms also affected prices, with average daily rates falling by over 40% YoY.

Commenting on the DEM’s findings, Andrew Webb, Chief Economist with Grant Thornton, said:

“Q2 has brought the deep impact of the economic shutdown into sharp focus.  Key indicators of the economic health of the city all displayed dramatic downturns. Employment levels in Dublin fell, business activity contracted markedly, while travel patterns in to and around the city region also declined significantly.

As the economy moves tentatively out of lockdown, some green shoots of economic recovery have emerged, with declining numbers now on income supports and signs of increased activity in tourism. Q3 will provide more evidence of the full impact of the downturn and whether the early momentum from the lifting of lockdown is maintained into the autumn.”

MasterCard SpendingPulse™ data sees tourist spending ease

The MasterCard SpendingPulse™, published as part of the DEM, also underlines the deep impact which the global pandemic is having on retail spending in the Dublin economy. Sales fell by 12% YoY in Q2 according to MasterCard, with significant YoY declines recorded in the discretionary and household goods categories in particular. A clear shift towards eCommerce is evident, with traditional bricks-and-mortar retailers such as department stores suffering as a consequence. 

Retail spending by tourists in Dublin fell to negligible levels in Q2, with declines of over 50% recorded across each of Dublin’s major international markets. The greatest contraction was in the Chinese market where tourist spending fell by 94.3% YoY. This was followed by the more sizeable tourist markets of France (-84.1% YoY) and the UK (-73.3% YoY).

Michael McNamara, Global Head of SpendingPulse, MasterCard, said on consumer spending:

“Restrictions on bricks and mortar retail activity contributed to declines in retail sales growth rates in Q2 2020 across both Dublin and Ireland. Sectoral divergences were stark with discretionary spending under extreme pressure while expenditure on necessities surged.”

ENDS

Notes to the Editor

The Dublin Economic Monitor is produced by Grant Thornton on behalf of the four Dublin Local Authorities to provide timely, reliable data and commentary on the economic landscape of the Dublin region. It covers 14 key indicators, consumer spending data from the MasterCard SpendingPulseTM and provides regular insights into different aspects of Dublin’s economy.  

To access the full report please click on the following link: www.dublineconomy.ie

Follow us on @DCCEconDev

Key Highlights:  

  • Business activity, as captured by the IHS Markit PMI, contracted at the most severe rate on record in Q2 2020. Both new order levels and employment in Dublin firms declined substantially as the Capital fared worse than the rest of the country.
  • Employment levels in Dublin fell by over 33,000 YoY in Q2 2020 with particularly acute reductions in the accommodation & food and transport & storage sectors. Unemployment rose to 5.3% in the quarter, though it is likely to be closer to the current national COVID-19 adjusted rate of 15.4%.
  • Residential property prices in the Capital fell for a second consecutive quarter as transaction levels in the market receded. Construction activity also contracted in Q2 and will be expected to further affect housing supply in the coming quarters.
  • Office vacancy rates increased in both Dublin 2/4 and the Capital’s suburbs with many proposed transactions delayed or cancelled due to Covid-19.
  • Public transport usage fell by over 76% YoY to 14 million passenger trips in Q2 2020. All four modes of public transport in Dublin were impacted by both domestic travel restrictions and trends towards remote working.
  • Passenger throughput at Dublin Airport contracted from 6.7 million in Q1 2020 to just 156,000 in Q2 as international travel restrictions severely disrupted passenger movements, though there has been evidence of renewed activity in the third quarter.
  • Activity at Dublin Port continued to decline in the second quarter of 2020, falling by over 17% YoY. Imports were most strongly affected and reduced by more than 20% YoY.
  • Occupancy rates in Dublin hotels returned to growth in July 2020 but remained very low at 16.1%. Average daily rates for rooms remain over 40% below the same point in 2019.
Feedback