In Ireland, and as outlined in our July Quarterly Bulletin (QB), the evidence suggests that economic activity has weakened as the year has progressed, tempering the strong post-pandemic recovery that had been underway. That recovery from the most severe aspects of the pandemic is most evident in the labour market, with the unemployment rate now at 4.5 per cent.
A slowdown in the pace of employment growth alongside historically high vacancy rates signals that the overall economy was operating at close to its capacity in the first half of 2022. However, while starting from a relatively favourable position, recent developments place a drag on domestic demand, which is unlikely to ease until real income growth turns positive again.