The latest high frequency data suggest that the Irish economy is set for a rebound with some momentum in the second half of 2020. Retail sales for August show a 9.0% yoy increase for the headline number (i.e. includes car sales) that reflects a 94% increase since the April low-point. Even excluding the volatile car sales figures, the underlying increase is 6.5% yoy and 41% up since April. Meanwhile, daily debit card purchases and credit card transactions data shows that spending levels are still well above levels seen in early March. However, some caution may be warranted as a downward trend has emerged from the beginning of October. This may be due to some volatility that we have seen in the data, or it may be due to more consumer caution as coronavirus cases grow nationwide as the country has moved to stricter restrictions recently.
While the official unemployment rate increased marginally to 5.4% in September from 5.2% in August, the Covid-adjusted unemployment rate, which includes those receiving the Pandemic Unemployment Payment (but therefore not seeking work meaning they are not included in the “official” figure) dropped to 14.7% in September from 15.3% in August and markedly below the April peak of 29.1%. Increased health-related restrictions in Dublin (and more recently nationwide) have prompted a rise in numbers claiming the Government’s Pandemic Unemployment Payment, the first rise since May. However at 217k, this still represents a marked easing from the 602k peak of early May. Meanwhile, Irish consumer prices fell by 0.4% mom in September, translating to an annual inflation rate of -1.2% yoy. This is the lowest inflation rate since 2010 and is the sixth consecutive drop in the annual inflation rate. This price weakness likely reflects of some uncertainty surrounding Covid-19 as well as a weaker sterling.