Recent high frequency indicators again give a mixed picture on the Irish economy but on the whole, reflect continuing solid economic growth. While the latest unemployment data show a slight uptick in January to 4.8% from 4.7%, this was due largely to an increase the unemployment rate of those aged 15-24 from 11.1% in December to 11.8% in January. We think this is more likely a statistical quirk in the model estimate of the monthly unemployment rate rather than an indication of labour market movements in that age group.
Manufacturing production grew marginally by 0.2% in 2019. These headline data are largely influenced by multinational activity, but if we look the traditional sector, which is largely comprised of domestic businesses, there was annual growth of 6.3% in 2019, the biggest increase since the data has been collected since 2015. Business sentiment remains strong, with manufacturing PMIs back in expansion territory and services PMIs rising to a seven-month high.
Consumer sentiment reached a six month high but is still sharply lower than in January 2019 or average level of past five years. The data suggest that this figure was due to a reduced risk of a ‘crash out’ Brexit and the usual start of year optimism. However, uncertainty and a narrowly felt improvement in living standards means a ‘feelbad’ factor still dominates. Retail sales data for 2019 as a whole show that retail sales grew by 2.2%, a notable slowdown from 2018’s rate of 3.8%. However, excluding car sales, retail sales grew by 4.3% on average, up from 2018’s figure of 3.7%.
In terms of inflation, consumer price inflation ticked up to 1.1%
yoy in December due to higher oil and airfare prices as well as some
pick-up in rent, mortgage interest and electricity prices. This
brought average inflation to 0.9% for 2019 as a whole, up from 0.7% in
2018 and the fastest annual rate of inflation since 2012. Irish house
price inflation dipped marginally to 0.9% in December from a
downwardly revised figure of 1.1% in November. The December property
price data remain consistent with an extended and bumpy bottoming out
process in Irish property price inflation. The modest downward
revision to the preliminary November numbers (which could be further
adjusted in either direction next month) suggests that this process
may have further to run.