Business sentiment steady and households more upbeat in latest Bank of Ireland Economic Pulse
- Bank of Ireland Economic Pulse at 101.5 in June, broadly unchanged on May
- Services, Retail & Construction Pulses rise over the first half of the year
- Consumer sentiment up in June, with a 2.5 point increase on the previous month
- Households more optimistic about outlook for economy and personal finances
The Bank of Ireland Economic Pulse, which combines the results of the Consumer and Business Pulses, was 101.5 in June, broadly unchanged (+0.2 points) on May, with consumer sentiment up and the business index slightly softer. The surveys were conducted prior to the UK’s EU referendum.
The Business Pulse, which surveyed 2,000 businesses, stood at 102.7 in June, down marginally (-0.4 points) on May. While the Construction Pulse registered a strong pick up (+9.6 points) in June as order book positions improved, the Services (-0.4) and Retail (-3.0) Pulses softened following sharp increases in May, with the Industry Pulse also easing (-0.9). However, the Services, Retail and Construction Pulses all rose over the first half of the year.
The Consumer Pulse, conducted with 1,000 households, gained ground in June, coming in at 96.8 (+2.5 on May). Households were more upbeat about the outlook for the economy and their personal finances this month, with six in ten expecting the wider economic environment to get better over the next year and around four in ten anticipating an improvement in their own financial situation.
Discussing the Economic Pulse, Dr. Loretta O’Sullivan, Group Chief Economist, Bank of Ireland said: “With households in a more upbeat mood and overall business sentiment little changed, the Economic Pulse recorded another solid reading in June. While June saw firms downgrade their assessment of business prospects over the next 3 months, the number expecting an increase in activity continued to far outweigh the number expecting a decrease and the overall Business Pulse remains at a high level. The Consumer Pulse is up on last month, and more than one in three (37%) households surveyed think that now is a good time to purchase big ticket items such as furniture and electrical goods. The research was conducted prior to the UK’s EU referendum last week so we may see some impact from this in next month’s surveys.”
The Housing Pulse also rose in June, to 105.9 from 104.0 in May. 77% of Dublin households expect house prices to increase over the next 12 months, with the Rest of Leinster at 71%, Munster at 68% and 56% in Connacht/Ulster. The share of respondents expecting house prices to increase by more than 5% over the coming year edged a little higher in June, as did the percentage expecting rent increases above the 5% mark. Unsurprisingly the greatest expectation of rental increases was in Dublin, with 69% of respondents expecting an increase in rents over the next 12 months, compared with 66% in the Rest of Leinster, 62% in Munster and 52% in Connacht/Ulster. “The cost of renting is an issue that has been coming through in the survey findings for some time now; with households in general, and students and the unemployed in particular, citing it as one of their main concerns,” according to Dr. Loretta O’Sullivan.
The Bank of Ireland Regional Pulses, which monitor the three month moving averages show a rise in sentiment in all four regions:
- Dublin Pulse = 102 +2 points on the previous survey
- Rest of Leinster = 98.8 +1.0 point
- Munster = 97.5 +2 points;
- Connacht/Ulster = 95.7 +0.3 points
Households in Dublin, the Rest of Leinster and Connacht/Ulster were more positive about the economic outlook this month with Munster unchanged. Households in Munster significantly upgraded their assessment of their own financial prospects, with 44% predicting an improvement over the next 12 months (compared to 30% in Connacht/Ulster, 38% in Dublin and 37% in the Rest of Leinster).
In contrast, the outlook for business activity was softer in each region in June, though the number of firms expecting an increase in activity over the coming months continued to exceed those expecting a fall.
Bank of Ireland is partnering with the European Commission on the research, with the data gathered by the bank feeding into the EU Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, a Europe-wide sentiment study running since the 1960s. The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of Bank of Ireland 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.