Latest AIB/Chambers Ireland Economy Watch
The most recent AIB/Chambers Ireland Irish Economy Watch, (published July 27, 2026) presents a mixed but broadly resilient picture. Ireland’s domestic economy continues to grow, supported by consumer spending, services and investment. However, construction, traditional industry and retail remain under pressure, while inflation and housing costs continue to affect households and businesses.
Key findings
Domestic economy: Modified Domestic Demand grew by 3.4% year-on-year, including a 2.9% increase in consumer spending.
Headline GDP: GDP fell by 13%, largely because the exceptional multinational export growth recorded in 2025 unwound. This does not reflect an equivalent contraction in the domestic economy.
Manufacturing: The Manufacturing PMI remained strong at 54.9, but traditional industrial production was 8.7% lower year-on-year.
Services: The Services PMI rose to 54.2, reflecting stronger activity, new business, exports and confidence.
Construction: The Construction PMI fell to 45.4. Housing, commercial activity and new orders all contracted sharply.
Consumer activity: Retail sales fell by 0.4% in the three months to May, although core sales rose by 0.4%. Consumer sentiment improved for a second consecutive month.
Inflation: CPI inflation eased to 3.4% in June, but cost pressures remained significant for businesses and households.
Employment: Unemployment averaged 4.9% in the second quarter. Employment remained close to a record 2.8 million, although annual employment growth had stalled.
Housing: Completions rose by 32.9% year-on-year, bringing the 12-month total to approximately 38,200. However, weaker construction activity raises concerns about future supply.
Housing market: Mortgage approvals increased by 2.8%, but residential transactions fell by 7.4%. House-price inflation slowed to 6.2%, while rents continued to rise.
Trade: Exports fell by 35.7%, mainly because pharmaceutical exports declined following an exceptional increase in 2025. Ireland still recorded a €21.5 billion trade surplus.
Public finances: Tax receipts increased by 1.2%, while government expenditure rose by 7.6%. The rolling Exchequer surplus improved to €3.3 billion.
The report highlights continuing challenges around housing supply, recruitment, operating costs and subdued consumer confidence. The contraction in construction and traditional industrial production also warrants attention.
However, growth in domestic demand and services provides a positive foundation.
Overall: Ireland’s domestic economy remains resilient, but growth is uneven and increasingly dependent on controlling costs, maintaining consumer confidence and addressing infrastructure and housing constraints.
Ends
