BoI Economic Pulse dips in April as business confidence eases
- Business sentiment down after three month bull run
- Consumer confidence little changed but households taking advantage of Easter sales
- Majority think it is cheaper to buy than rent
The Bank of Ireland Economic Pulse, the Irish survey data which feeds into the EU Commission, came in at 94.9 in April 2018. The index, which combines the results of the Consumer and Business Pulses, was down 2.3 on March but broadly unchanged on a year ago.
Discussing the Economic Pulse, Dr. Loretta O’Sullivan, Group Chief Economist, Bank of Ireland said: “With the mood among households little changed on the month and much more upbeat than this time last year, it was largely a case of steady as she goes for the Consumer Pulse this month. Firms were generally gloomier though, and the Business Pulse – which posted a 21 month high in March – eased back this month.”
The Business Pulse stood at 94.1 in April 2018, down 2.7 on March’s reading after three consecutive months of increases. The Services, Retail and Construction Pulses all lost ground this month. When asked about the factors currently limiting their activity, firms called out a range of issues including; inter alia uncertainty, demand, financing, labour shortages and the weather.
Half of firms expect business activity to improve over the next three months though and hiring intentions remain positive. On the wage front, 42% of firms in industry, 37% in services, 36% of builders and 28% of retailers are planning on increasing basic pay in the coming 12 months, by 3.6% on average.
Dr. Loretta O’Sullivan commented; “Business sentiment dipped for the first time this year in April, interrupting the Economic Pulse’s upward momentum. There is perhaps a case of fatigue at play here with the bad weather and lingering uncertainty. There hasn’t been much progress on the Border issue, for example, and we see that sentiment among Connacht/Ulster businesses was down this month.
“However, the majority of firms remain on a growth trajectory, with two in three looking to expand their business in the next one to three years.”
The Consumer Pulse came in at 97.8 in April 2018. Households’ assessment of the economy and their own finances was marginally softer this month, whereas buying sentiment rebounded. With the Easter sales in full swing, 37% considered it a good time to make major purchases such as furniture and electrical goods. Over a quarter of households also indicated that they are likely to buy a car in the next 12 months, with data from the CSO pointing to demand for used imports.
Dr. Loretta O’Sullivan said; “Households were hunting for bargains as well as eggs over the Easter period. With sales a plenty, 37% thought it was a good time to buy big ticket items this month, up from 34% in March.”
“Our research finds that 27% are likely to buy a car in the next 12 months and going by recent trends, some of these will be used imports. The weakness of the pound has contributed to a surge in demand for imports from the UK, with sales of new cars feeling the pinch as a result.”
The Housing Pulse gained ground in April 2018, coming in at 116.1 from 114.2 in March. The share of respondents expecting prices to increase over the next 12 months ticked up this month in all regions bar Dublin. Most households also expect rents to rise in the year ahead. When it comes to the ‘buy versus rent’ debate, the April survey finds that 70% think it is cheaper to purchase a property in their area than it is to rent. This is up from 60% at the start of 2016 and owes much to house prices still being around 20% off their previous peak whereas rents are well above theirs.
Dr. Loretta O’Sullivan commented; “Rising houses are a stumbling block for a lot of people, so some households are opting to do up or renovate an existing property instead of moving. Ratings hits like ‘Room to Improve’ might also be having an impact! Our latest survey finds that almost one in three is planning on spending a large sum of money on home improvements in the next 12 months.”
The Bank of Ireland Regional Pulses combine the views of households and firms around the country. The 3 month moving averages show that sentiment was up on the month in Dublin and Munster, broadly unchanged in the Rest of Leinster but down in Connacht/Ulster in April 2018.
- Dublin Pulse = 99.4 + 1.2 points on the previous survey
- Rest of Leinster = 94.4 + 0.1 points
- Munster = 95.7 + 1.0 points
- Connacht/Ulster = 89.9 – 1.0 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.