Bank of Ireland Economic Pulse continues on upward trajectory

Posts a 20 month high in February

  • Ongoing job gains and rising incomes supporting consumer confidence
  • Business sentiment up in all four sectors
  • However infrastructure pressures apparent across the regions

The Bank of Ireland Economic Pulse, the Irish survey data which feeds into the EU Commission, came in at 95.2 in February 2018. The research, which combines the results of the Consumer and Business Pulses, was up 2.4 on January and 2.7 on a year ago.

Discussing the Economic Pulse, Dr. Loretta O’Sullivan, Group Chief Economist, Bank of Ireland said: “With consumer confidence back at pre-Brexit levels and business sentiment up for a second month running, the Economic Pulse posted a 20 month high in February. The Consumer Pulse has been on a broad upward trend for some time now and was at a high level again this month. The recent uptick in the Business Pulse is also welcome.”

Consumer Pulse

The Consumer Pulse stood at 99.7 in February 2018, little changed on January’s two year high and up 9.9 on a year ago. Households were a little more muted about the economy’s prospects this month, and with the post-Christmas sales at an end, buying sentiment softened with 39% considering it a good time to purchase big ticket items, compared with 41% last month.

Consumers’ assessment of their own financial situation was a touch more positive though, and 70% indicated that they are likely to save over the coming year. Topping the list of reasons for putting money aside were having a rainy day fund and providing for retirement and later life needs.

Dr. Loretta O’Sullivan commented; “The Consumer Pulse was at a high level again in February, with job gains and rising incomes feeding into a general sense of confidence. Households were more upbeat about their own finances this month, but with the focus of the Brexit talks turning to the transition period and indications of substantive differences between the UK and the EU on elements of this, they sounded a more cautious note on the outlook for the economy.”

Business Pulse

At 94.1, the Business Pulse was up for a second month running in February 2018. This was 3.1 higher than last month’s reading and 0.9 higher than a year ago. All four sector Pulses gained ground this month, with an across the board improvement in hiring intentions and firms in industry, services and retail more optimistic about prospects for business activity over the next 3 months. This month’s research also examined the broader operating environment that businesses across the different regions face.

Dr. Loretta O’Sullivan commented; “While the results point to a broad level of satisfaction among firms with basic infrastructure such as water, waste and energy; transport (especially in Munster and Connacht/Ulster), telecommunications (Connacht/Ulster in particular) and housing infrastructure scored less well.”

Housing Pulse

The Housing Pulse came in at 115.5 in February 2018, down 1.7 on the month but up 7.3 on this time last year. Disequilibrium in the housing market is impacting both house prices and rents, with rising prices a concern for four in ten households and the cost of renting a worry for a similar proportion. The February survey also finds that almost half of firms in Dublin and Munster, two in five in the Rest of Leinster, and a third in Connacht/Ulster, consider the housing infrastructure in their region to be inadequate.

“Housing infrastructure impacts on the quality of life but also has a role to play in attracting staff, so it is relevant for firms as well as households. Given the well-known problems in the market, it is not surprising that the country’s housing infrastructure is viewed as sub-par by many firms and interestingly, firms in Dublin, the Rest of Leinster and Munster cite it as the priority area for investment to help strengthen local economies and the business environment. In Connacht/Ulster, transport just pips telecommunications to the post.”

Regional Pulse

The Bank of Ireland Regional Pulses combine the views of households and firms around the country. The three month moving averages show that sentiment was up on the month in all regions in February 2018.

The February survey finds that many firms rate the housing, transport and telecommunications infrastructure in their region as inadequate though, while 75% of firms in Connacht/Ulster, 70% in Munster, 64% in the Rest of Leinster and 62% in Dublin expect Brexit to have a negative impact on the local economy in their region over the next 12 months.

Three month moving averages:

  • Dublin Pulse = 94.0 + 0.5 points on the previous reading;
  • Rest of Leinster = 91.5 + 1.1 points on the previous reading;
  • Munster = 94.1 + 2.9 points on the previous reading;
  • Connacht/Ulster = 87.8 + 2.4 points on the previous reading;

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.