Economic Analysis

The manufacturing PMI stayed in expansion mode but fell to 51.6 in August. The service PMI eased further to 50.6 in August. The construction PMI fell to 45.9 in August, consistent with a fourth straight month of accelerating contraction and mortgage approvals rose by 3.1% year on year in the 3 months to July.

The September meeting of the Bank of England’s Monetary Policy Committee (MPC) saw the central bank maintain the Bank Rate at 4.00%. This was very much in line with market expectations. Once again, there was no unanimity within the MPC on its policy decision to hold rates steady.

The September meeting of Federal Reserve Open Market Committee (FOMC) saw the central bank cut interest rates for the first time since December of last year. The target range for the Fed funds rate was lowered to 4.00-4.25%. 

The ECB’s Governing Council meeting for September saw the central bank leave interest rates on hold for a second consecutive occasion. The deposit and refi rates were maintained at 2.00% and 2.15%, respectively. The ‘unchanged rates’ outcome was widely expected by markets. 

The Summer Economic Statement (SES) and National Development Plan (NDP) are key milestones towards Budget 2026. The SES sets out the fiscal boundaries of the Budget 2026 package to be announced in the autumn, while the NDP outlines the Government’s medium-term infrastructure priorities. 

Risk appetite improves following significant uncertainty/volatility in the aftermath of “Liberation day” However, there is still limited clarity on the ultimate landing zone for US tariffs. Market attention also focused on US fiscal & monetary policy, as well as geopolitical tensions Fed on hold for now. ECB near the end of its cutting cycle. BoE retains an easing bias. The dollar has weakened further in recent weeks. Euro likely to hold its gains, but high uncertainty still due to the evolving US policy landscape.

As we reach the halfway mark of 2025, the Irish residential property market continues to be defined by a shortfall in supply. The CSO completions data, which is the official measure of new supply indicate, a disappointing performance over the last year from the residential construction perspective.

The global economy entered 2025 in good shape, with indicators pointing to stronger growth in the Eurozone and UK, and continued robust, yet moderating growth in the US. However, the uncertainty created by the imposition of US trade tariffs, followed by partial 90-day delays, has created volatility in financial markets and concern in the real economy.