After Dramatic First Quarter, Production Drops Back.

Preliminary estimate of GDP in the first quarter of the year confirms that growth was brisk. This shows a rise in volume of 10.6% compared with the fourth quarter of 2024 and a 21.1% increase compared with the first quarter of 2025. (This massive increase was enough to push up the estimate of EU growth in the first quarter and to attract unwelcome attention to Ireland’s tax regime in the current issue of the Economist magazine). The surge was due to the modern sector and specifically exports to the US accelerated in the first quarter to get into the US before the Trump tariffs cut in.

Modified Domestic Demand, which strips out the effects of the multinationals was subdued. In the first quarter it was slightly down on the preceding quarter and only up 1% compared with the first quarter of 2024.

The surge in GDP is reflected in the index of industrial production for the first quarter which shows a large jump in production of 14.9% on the fourth quarter of 2024 and 34.9% up on the first quarter of 2024. The April figure shows a sharp drop as production in the Modern sector (i.e. US export oriented businesses) drops backs towards normal. By contrast the Traditional sector has continued a modest recovery into April.

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. In April, the downturn visible in GDP and industrial production manifested itself in services too. The information sector accounts for most of the growth and the April fallback. 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. In April, with the US tariff deadline past, the volume of trade declined dramatically.

However, in contrast to all f the above, the AIB April and May survey of purchasing managers suggests that growth has continued into the second quarter. 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 five months of 2025. 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 and May. 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 in April and May indicating that the a high rate of economic activity is being maintained into the second quarter. At 4% of the labour force aged 15-75, the level of unemployment is lower than any time since the boom before the financial crash.