Bank of Ireland Economic Pulse drops in September
Both consumer confidence and business sentiment more subdued
- Business Pulse falls for a second month running
- Brexit remains a headwind for firms in all regions
The Bank of Ireland Economic Pulse came in at 88.7 in September 2017. The index, which combines the results of the Consumer and Business Pulses, was down 3.1 on August and was 1.6 lower than this time last year.
With Budget 2018 fast approaching at home, the UK and the EU making little progress in the latest round of withdrawal negotiations and geopolitical tensions on the international stage, the September data point to softer sentiment across the board. Households were less positive about the economy and their own finances this month, while on the business side, all four sector Pulses gave up ground.
Discussing the Economic Pulse, Dr. Loretta O’Sullivan, Group Chief Economist, Bank of Ireland said: “The rebound in consumer confidence lost some steam this month, and with business sentiment also subdued, the Economic Pulse posted its lowest reading of the year to date. This month’s reading was also the weakest since last November when the outcome of the US election, coming on top of the Brexit-vote, rattled households and firms.
“Some nervousness in the run up to the Budget may have been at play this month, while things are still up in the air with Brexit. We will have to wait and see what measures the government rolls out on Budget day. In the meantime, the solid economic and labour market performance in the second quarter is encouraging.”
Business Pulse
The Business Pulse fell for a second month running in September 2017 to 87.1, with sentiment down in the four sectors. Firms downgraded their assessment of the current jobs situation this month, and were generally more subdued about near-term prospects for business activity and / or hiring. In terms of the broader operating environment, the September results point to a broad level of satisfaction among firms with basic infrastructure such as water, waste and energy; whereas transport, telecommunications and housing infrastructure falls somewhat short.
Dr. Loretta O’Sullivan commented; “The business mood was subdued again this month, with the Industry, Services, Retail and Construction Pulses all losing ground. The UK’s decision to leave the EU continues to be a concern, with the majority of businesses – led by those in Connacht/Ulster – expecting it to have a negative impact on the local economy in their region over the next 12 months.”
Consumer Pulse
The Consumer Pulse lost ground in September 2017, coming in at 95.3. While this was down 3.7 on August’s near-record high, it was up 1.6 on this time last year. Households were more muted this month and scaled back their assessment of both the economy and their own financial situation. Buying sentiment was also softer following a seasonal bounce in August, with 36% considering it a good time to purchase big ticket items such as furniture and electrical goods (40% last month).
Dr. Loretta O’Sullivan commented; “Paying bills and the tax burden, along with the cost of renting and rising house prices, topped the list of household concerns this month. Meanwhile, on the savings front, 69% indicated that they are likely to put some money aside over the coming year.”
Housing Pulse
The Housing Pulse stood at 117.0 in September 2017, up 1.0 on last month and 11.9 on a year ago. With demand continuing to outstrip supply, house price and rent expectations were in firm positive territory again this month. While housing infrastructure has an impact on people’s quality of life, it is also relevant for businesses in attracting staff. However, one in three firms in Connacht/Ulster and almost half in Dublin, the Rest of Leinster and Munster rate the housing infrastructure in their region as inadequate.
Dr. Loretta O’ Sullivan commented; “This month’s data shows that many firms consider the housing infrastructure in their region to be inadequate. Firms in Dublin, the Rest of Leinster and Munster also citied it as the priority area for investment – to help strengthen local economies and the business environment.”
Regional Pulse
The Bank of Ireland Regional Pulses bring together the views of consumers and businesses across the country. The 3 month moving averages show that sentiment was down in Dublin, the Rest of Leinster and Connacht/Ulster in September 2017, but up in Munster.
Households were generally less positive about the economy and their own finances this month, while firms downgraded their assessment of the current jobs situation and, in all regions bar Munster, pared back their near-term expectations for business activity. Brexit remains a headwind for firms in all regions, with the September results indicating that most expect it to have a negative impact on local economies.
Dr. Loretta O’Sullivan commented; “This month’s Pulse focused on the regional business picture and the broader operating environment that firms across the four regions of the country face.
“The September survey findings shed some light on how businesses’ view the infrastructure conditions in their particular region. While they point to a broad level of satisfaction with basic infrastructure such as water, waste and energy, other aspects fall somewhat short.
“This is especially the case for transport in Connacht/Ulster, where one out of two firms rate the existing infrastructure as inadequate, double the one in four figures for Dublin and the Rest of Leinster.”
Telecommunications also scored particularly poorly in Connacht/Ulster, with half considering it to be inadequate. This compares with just a third of businesses in the Rest of Leinster and Munster, whereas the bulk of Dublin businesses rate it as adequate or above.
Three month moving averages:
- Dublin Pulse = 93.1 – 1.3 points on the previous survey;
- Rest of Leinster = 91.0 – 2.2 points;
- Munster = 92.2 + 1.8 points;
- Connacht/Ulster = 88.6 – 4.1 points.
About the Bank of Ireland Economic Pulse:
The Bank of Ireland Economic Pulse survey is conducted in conjunction with the European Commission, with the data 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.