The initial impact of COVID-19 on the Dublin economy is clearly evident in the latest Dublin Economic Monitor (DEM) published this morning by EY-DKM Economic Advisory on behalf of the four Dublin Local Authorities.
The data mainly covers the first quarter of 2020 and captures the early part of the current economic contraction. Dublin City Council say that this trend looks set to accelerate in the second quarter when the full effects of the COVID-19 lock down become evident.
This economic deterioration is particularly apparent in the Dublin hotel sector where April occupancy rates (-57% YoY), Average Daily Rates (-30% YoY) and supply (-54% YoY) have all collapsed. Data from Dublin airport also reflects this with provisional numbers pointing to a 57% annual fall in March.
The monitor shows the broader business sector ground to a halt in the first quarter with the Markit PMI index falling into contractionary territory for the first time in over seven years. This is apparent in the -4.7% yoy fall in volumes at Dublin Port in the first quarter, the largest decline since the third quarter of 2009. This also looks set to accelerate in the second quarter with the new orders componenet of the PMI, a leading indicator, decreasing for the first time since the third quarter 2012.
While the official unemployment rate in the capital only rose marginally to 4.6% in the first quarter, a sharp increase is expected in the second quarter in line with the national COVID-adjusted unemployment rate, which rose to 28.2% in April (NSA).
The Mastercard SpendingPulse™, published as part of the DEM, also shows the effect that the lockdown is having on consumer spending in Dublin as shops closed and travel restrictions were introduced at the end of March 2020.
The diverging patterns between necessity (+5.1% YoY) and discretionary spending (-5.1% YoY) were noticeable as consumers stockpiled essentials but were more cautious elsewhere. The likelihood is that spending on necessities will return to more normal levels. Unsurprisingly, online sales accelerated in Dublin (+10.7% YoY) as the closure of physical shops saw customers move online.
Tourist spending in the capital also showed the effect of travel restrictions with all international nationalities measured showing annual declines except the UK, which rose by 1.3% YoY. Declines from the USA (-14% YoY) and France (-16.4% YoY) were particularly stark.
Commenting on the report’s findings, Director with EY-DKM Economic Advisory, David McNamara said, "As Ireland begins the slow process of re-opening the economy, attention will turn to the post-COVID landscape and what changes might occur from the crisis. As was the case in the aftermath of the last recession, Dublin should recover at a faster pace than the rest of the country due to its industry mix of domestic services firms and multinationals, but most forecasters are now discounting any prospect of a ‘V-shaped’ recovery."
He added, "Jobs might be permanently lost in tourism and retail in the city, while a shift towards remote working in other sectors could change the way citizens travel and socialise in the city. As we emerge from the crisis, the Dublin Economic Monitor will continue to be a vital resource to track these changes and the city’s progress in the aftermath of the crisis."