The Bank of Ireland Economic Pulse stood at 93.7 in August, up 2.5 on July. The index, which combines the results of the Consumer and Business Pulses, has recouped a quarter of the ground lost following the Brexit vote. The Business Pulse rose in the month, on the back of a pick-up in confidence among firms in the industry, retail and construction sectors. The Consumer Pulse also rose in August, with households more positive about the outlook for the economy and employment.
The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of the Bank with 1,000 households and over 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.
The Bank of Ireland Economic Pulse stood at 93.7 in August 2016, reflecting a rise in both the Business Pulse and Consumer Pulse.
Dr Loretta O’ Sullivan, Group Chief Economist, Bank of Ireland said: “While last month dipped significantly following the Brexit vote, August saw the Economic Pulse recover a quarter of the ground it lost in July. Although there has been a rise in sentiment, many consumers and businesses are still assessing the potential impact of Brexit. We will be closely monitoring the situation over the coming months.”
The Business Pulse rose to 94 in August, up 2.4 on July’s reading, recouping one fifth of the ground lost last month. The Industry and Retail Pulses saw the largest increases in August (+7.7 and +6.1 respectively), while construction was up 4.6 and sentiment among service firms was down very slightly by -0.3.
The August findings indicate that the majority of firms do not expect to change their selling prices in the near term, and also point to some easing in input costs, excluding labour costs, in the industry and retail sectors over the past three months. 77% of firms in industry expect no change in selling prices, 81% in services, 83% in retail and 71% in construction.
Discussing the business data, Dr Loretta O’ Sullivan said: “The Industry Pulse put in a strong performance this month, particularly medium/larger firms, while the Retail and Construction Pulses recovered some of the very steep losses sustained in July. In contrast, the Services Pulse saw a slight softening in the month. While the fall in sterling is a headwind for exporters, the August data show an easing in input costs in the industry and retail sectors as the weaker pound feeds through to lower import prices.”
The Consumer Pulse stood at 92.5 in August, up 2.8 on the July reading. Households were a bit more positive about prospects for the economy and the unemployment outlook this month compared to last, with the Consumer Pulse recouping two fifths of the drop from July. 50% of respondents expect the general economic situation to improve over the next 12 months, with 28% expecting no change. One in three (34%) households expect an improvement in their financial situation over the next 12 months, with 49% expecting no change.
Buying sentiment also increased slightly in August, with 34% considering it a good time to purchase big ticket items such as furniture and electrical goods (the July figure was 32%), while two in three indicated that they are likely to save some money in the next 12 months.
“The latest data point to reasonably solid saving intentions, especially among younger cohorts and those living in rented accommodation and with family,” according to Dr Loretta O’Sullivan, Group Chief Economist, Bank of Ireland.
At 102.9, the Housing Pulse was broadly unchanged in August 2016. House price expectations remained in positive territory, with two out of three survey respondents anticipating increases over the next 12 months. At the regional level, Dublin continued to lead the way with 74% expecting price gains, compared with 64% in the Rest of Leinster, 70% in Munster and 54% in Connacht/Ulster. Similarly, the percentage of respondents expecting rents to rise in the coming year was greater in the capital and Munster.
“Rents are now back above their previous peak and the widespread expectation is that they will rise further over the next 12 months. House price expectations remained in positive territory in August. At the regional level, Dublin continued to lead the way with Connacht/Ulster bringing up the rear,” according to Dr Loretta O’ Sullivan, Group Chief Economist, Bank of Ireland.
The Bank of Ireland Regional Pulses, which bring together the views of consumers and firms in different parts of the country, shows that households in Dublin, the Rest of Leinster and Munster were more positive about the outlook for the economy this month compared to last. 52% in Dublin expect to see an improvement in the general economic situation over the next 12 months, with the same proportion (52%) in the Rest of Leinster, 47% in Connacht/Ulster and 47% in Munster. Expectations for near term business activity were also up on July in each of the four regions.
House prices are expected to increase in all areas. 74% in Dublin expect house prices to increase over the next 12 months, followed by 70% in Munster, 64% in the Rest of Leinster, and 54% in Connacht/Ulster.
Bank of Ireland is partnering with the European Commission on the research. The data is used in the EU Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, a Europe-wide sentiment study running since the 1960s.