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Dublin business activity reduced to 7-year low as virus takes economic toll

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Business activity in Dublin has fallen to a seven-year low, as the coronavirus continues to wreak havoc on the economy.

The first-quarter Dublin purchasing managers index (PMI) published by IHS Markit fell to 49.9 from 53.7, signalling a stagnation in business output in the capital, as the outbreak of Covid-19 saw firms grind to a halt at the end of March.

Any PMI reading over 50 is deemed growth, below 50 indicates a contraction in activity.

The manufacturing sector moved into outright decline during the three-month period in Dublin.

Both the services and construction sector, which had stronger momentum in the first two months of the year, slowed but just managed to remain in expansionary territory for the three-month period as a whole.

Both of these sectors are likely to suffer accelerated losses in output as social distancing policies continue.

Andrew Harker, economics director at IHS Markit, said: "Prior to the outbreak, companies in the capital had been enjoying solid increases in output, meaning that the data for Q1 has held up better than in the rest of Ireland.

"The effects of the pandemic are clearly going to be felt all over the country though, with the economy suffering a deep contraction at present."

Looking forwards, the coronavirus induced slowdown looks set to accelerate over the next three months, with new orders in Dublin decreasing for the first time since 2012, as customer demand seized up and staffing levels at companies fell at the end of March, according to the PMI report.

The IHS Markit Dublin PMI is a survey of business activity in Dublin calculated using responses from around 200 companies per month across the services, manufacturing and construction sectors.

Earlier this month, the Central Bank warned that the damage stemming from the coronavirus on the economy will run far deeper if lockdowns last more than three months.

Estimates of the impact of the coronavirus outbreak are out of date almost as soon as they are published.

Irish Independent