Economic report

GDP rebounds; net exports dominate.

Q2 GDP rose 0.6% q/q and 1.2% y/y, after a flat Q1. Eurostat revised Q2 q/q growth from 0.4% to 0.6%; this is a same-period revision.

Published Q2 GDP contributions: consumption +0.2pp, net exports +0.9pp and inventories −0.5pp; government consumption and fixed investment were negligible at reported precision.

The ECB’s 2026 GDP projection rose to 0.9% from 0.8%; Q2 surprises and a firmer second half outweigh the downward Q1 revision. Direct productivity per hour grew 0.6% y/y in Q2.

Ireland’s Q2 growth of 10.2% adds volatility; net exports do not establish broad domestic strength.

Fixed investment contracts slightly.

Total fixed investment fell 0.1% q/q in Q2 after −0.2%, while rising 1.4% y/y. Public investment was 3.6% of GDP in 2025, a current-price annual ratio.

September industrial order books improved and production expectations rose. These harmonised surveys signal intentions, not realised investment.

ECB projections distinguish AI, defence and infrastructure support from weak recent housing investment and a later decline in public-investment momentum as NGEU expires.

Financing pressure, energy costs and uncertainty can delay intended spending.

Consumption grows; retail and confidence soften.

Household consumption rose 0.4% q/q and 1.2% y/y in Q2. July retail volume fell 0.6% m/m but its three-month trend rose 0.3%.

September consumer confidence fell to −16.5 from −15.5. Its three-month average improved to −16.0 from −19.0; own-finance and major-purchase balances weakened this month.

The archived EA21 saving rate was 14.3% in Q1, unchanged q/q; real income per capita was flat. These older household accounts are shown as context, not a fresh directional signal.

Improving average sentiment coexists with the latest setback. Energy can erode real income.

Unemployment holds; employment growth is modest.

Unemployment was 6.4% in August, unchanged from July; the under-25 rate eased to 15.0% from 15.1%. Rates are seasonally adjusted shares of the respective labour force.

Domestic-concept employment rose about 0.1% q/q in Q2. Employment and hours worked are distinct; productivity per hour uses the latter.

Resilient employment does not imply that hiring is accelerating or that youth labour markets are strong.

Energy drives headline; core also edges up.

September headline HICP rose to 3.8% from 3.2%; core excluding energy and food rose to 2.5% from 2.4%.

Energy inflation was 18.8%, services 3.2%, food 1.4% and non-energy industrial goods 1.1%. These are annual component rates.

The latest verified published contribution breakdown is August: services +1.43pp, energy +1.29pp, goods +0.30pp and food +0.22pp. The −0.04pp residual reflects published rounding against the 3.2% headline.

An energy-led shock need not persist if pass-through and wage responses remain contained.

What to watch

Can demand broaden beyond the headline? Read consumption and investment alongside Irish volatility.

Does household confidence follow business? Track own finances, purchases and employment.

Does inflation spread beyond energy? Watch core services, Euribor and stress together.