GDP Edges up in Second Quarter – Stays Well Ahead of 2024 Levels.

Preliminary estimates of GDP in the second quarter of the year confirm that growth continued from the first quarter but at a reduced rate. GDP was up 0.2% on the first quarter, and Modified Domestic Demand by 0.6% which implies that it was one of the rare occasions on which the domestic economy outperformed the foreign sector which tends to dominate the overall GDP figures. As growth had been significant in the first quarter, spurred by the international sector heading off Trump tariffs expected in April, the level of GDP in the second quarter was quit high compared with year ago levels. In fact in the first half of the year GDP was 14% higher than the average in 2025 and MDD was up 3% on the same basis.

The decline in industrial activity in April, which followed the surge in the first quarter due to the stampede to beat US tariffs, was reversed to some extent in May and June. However, production was stabilised in July with a slight uptick in the level of production in the modern sector of about 2.0%. It is now about 10% higher than a year ago. The traditional sector has shown little change over the last year.

Services – powered by the modern information services sector – followed a similar pattern to industry. After a good year in 2024 services continued to expand briskly and production was running well ahead of 2024 levels in the first quarter of this year. In April, the downturn visible in GDP and industrial production manifested itself in services too but to a less marked extent. Still, in the second quarter and in July, production was well below first quarter levels – though still way ahead of year ago levels. The non modern sector has continued to run at a subdued level throughout 2025 to date.

The driving factor behind growth and decline in industrial production (and services) in the first six months of 2025 has been exports as seen in the Trade graph opposite. The volume of exports in the first quarter was 46% higher than in the previous quarter and 64% higher than in the first quarter of last year. In April, with the US tariff deadline past, the volume of trade declined dramatically and fell gain June. The July figures show a slight recovery. Overall, while exports fell 25% in the second quarter compared with the first, in the first half of the year the volume of exports was up 25.6% on the first half of last year.

The AIB Purchasing Managers Index showed a slight dip in the rate of activity in August for manufacturing and services. Nevertheless the trend is still positive suggesting that activity has been well maintained into the third quarter though at a reduced rate.

The final graph shows unemployment in absolute and percentage terms for August. The upward trend over the last year has come to a halt and a decline was recorded. There has been a revision to the figures which may be distorted by a change in the status of refugees. The latest decline seems to be more in line with the observed situation in the labour market.