Pick up in business sentiment behind increase in Bank of Ireland Economic Pulse in May
Bank of Ireland Economic Pulse came in at 101.3 in May, 2016 – up 5.3 points on the month of April. Sentiment among households softened slightly in May, in contrast with Business which picked up on the back of improved confidence among firms in the services and retail sectors. As the peak summer season approaches, two thirds of consumers are planning to spend the same or more on holidays this year
Friday, June 3rd 2016: The May Bank of Ireland Economic Pulse showed an overall improvement of 5.3 points on the previous month, with strong business sentiment outweighing a softer consumer index for the month. The Business Pulse stood at 103 in May, up 7.0 points on April. The services and retail pulses registered strong readings, helped by a pickup in hiring expectations.
“The Bank of Ireland survey indicates that over 50% of firms expect activity to increase in the next three months, with further job gains on the cards,” said Dr. Loretta O’Sullivan, Group Chief Economist, Bank of Ireland. “The May Pulse also points to some cost pressures, with 40% of businesses in industry, 34% in services, 38% in retail and 45% in construction indicating that input costs, excluding labour, have increased over the last three months. Notwithstanding this, the majority of firms do not expect to change their pricing in the coming quarter.”
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.
The Consumer Pulse came in at 94.3 in May, 2016, down 1.3 on April’s reading, as households scaled back their assessment of the economic situation over the past 12 months and their expectations for further falls in unemployment. O’Sullivan commented that “there was an annual increase in employment of 46,900 in the first quarter of 2016, according to the CSO, with almost half of the job gains outside of Dublin. The Bank of Ireland Regional Pulses indicate that firms across the country expect to hire over the coming months, which bodes well.”
Consumers’ assessment of their own financial situation was unchanged in May and buying sentiment also remained reasonably solid, with almost one in four households expecting to increase instore spending in the coming year and 17% indicating that they expect to spend more on online purchases. “With the weather improving and schools finishing up in the next month, holidays are on the agenda for many households. Compared to last year, two thirds of consumers are planning on spending the same or more on holidays this year.”
Having picked up sharply in April, the Housing Pulse eased back in May 2016 to 104.0. The majority of those surveyed continued to expect house price to rise over the next 12 months, with around one in four anticipating increases in excess of 5%. In Dublin, that figure was one in three. The cost of renting is an issue coming through in the survey findings, with households calling it out as one of their top concerns. 36% of respondents in Dublin expect rents to rise by more than 5% in the year ahead.