Economic Indicators Point to Continued Growth in First Quarter.

The available economic indicators suggest that the recovery noted in the fourth quarter of 2024 has continued into the first quarter of 2025.

Preliminary estimate of GDP in the first quarter of the year confirms that growth was brisk. This shows a rise in volume of 3.3% compared with the fourth quarter of 2024 and a 13.3% increase compared with the first quarter of 2025. GDP is, of course heavily influenced by the foreign sector but there is no preliminary estimate of Modified Domestic Demand. That will come in about one month.

Meanwhile, the national accounts for the fourth quarter of 2024 showed that GDP jumped 3.6% on the third quarter of 2024, seasonally adjusted, and 9.2% on the fourth quarter of 2023. These impressive numbers made up for a poor first three quarters of the year and resulted in a net increase for 2024 of 1.2% on 2023. Modified Domestic Demand (MDD), a measure of domestic economic activity, had a marginally better year and ended 2.6% higher than in 2023 though signs of a slow down in the last quarter.

So far in the first quarter of this year, the index of industrial production is up 14.9% on the fourth quarter of 2024 and 34.9% up on the first quarter of 2024. The running has been made by the modern sector with the traditional sector marginally above its 2024 average level though pulling up a bit in February and March. It remains to be seen how much of the activity in the modern sector is attributable to exporters acceleration exports in order to beat the introduction of US tariffs.

After a good year in 2024 services continue to expand briskly and production was running well ahead of 2024 levels in the first quarter. Compared to twelve months previously, services were 16% higher than in the first quarter of 2024. The information sector accounts for most of the growth. This has prompted the CSO to show a modified services index with the Information, Computer and Telecoms sector excluded. Modified Services have been declining since the start of the year.

The driving factor behind growth in the first quarter has been exports as seen in the Trade graph opposite. The volume of exports in the first quarter were 46% higher than in the previous quarter and 64% higher than in the first quarter if last year. US companies rushing to get in before Trump’s threatened tariff are surely the explanation. In that case a sharp decline in trade and all activity as measured by GDP can be expected this quarter.

Somewhat contradicting that is the April AIB survey of purchasing managers. Anything above zero in this presentation represents an increase and ups and downs represent rates of change. It can be seen that services, after a good 2024 have continued in positive territory in the first months of 2025 though with a slight slow down. Most encouraging is the trend in manufacturing. That had been negative in much of 2024 but so far this year has been positive with an acceleration in April. On these bases, the second quarter seems to have got off to a good start.

The final graph shows unemployment in absolute and percentage terms. The two measures are obviously closely aligned. At the end of last year there was a slight uptick in both seasonally adjusted indices and this continued into January. But the latest figures shows unemployment falling and in April was 8,400 lower than in March. At 4.1% the rate of unemployment points to a tight labour market.