Bank of Ireland’s Economic Pulse, the Irish survey providing data for the EU Commission, came in at 92.7 in September 2018. The index, which combines the results of the Consumer and Business Pulses, was up 1.4 on last month’s reading and 4.0 higher than this time last year.
Brexit was on minds again in September but a slew of positive economic data at home – including a strong GDP print for the second quarter and ongoing employment and earnings growth – looks to have provided some reassurance, with little change in consumer sentiment on the month and business confidence a touch firmer. Concerns among Irish businesses were evident, particularly among those outside the capital, in relation to telecommunications and transport infrastructure and across the board for housing infrastructure.
Commenting on the latest BOI Economic Pulse research, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said:
“This month’s Pulse focused on the regional business picture and the broader operating environment that firms around the country face. Infrastructure is an essential part of this and is critical for firms’ productivity and competitiveness. A number of key infrastructure concerns emerged for Irish businesses including transport in Munster, where over a third of firms rate the existing infrastructure as inadequate. In Connacht/Ulster, it is even higher at one in two. Telecommunications also scores poorly in Connacht/Ulster and generally gets a lower rating outside of the capital.
“Housing infrastructure also emerges as a problematic issue for businesses at the moment – negatively impacting their ability to attract staff and reflecting this, firms in Dublin, the Rest of Leinster and Munster cite it as the priority area for investment to help strengthen local economies.
“The new National Development Plan sets out various initiatives which should help address some of these issues, though there are likely to be some challenges ahead. There is already a shortage of construction workers for example.”
The Consumer Pulse stood at 96.5 in September 2018, broadly unchanged from last month but up 1.2 on a year ago. While households were a bit more upbeat about the economy and their current financial situation this month, they were more cautious about the outlook for their pockets – possibly reflective of nervousness in the run up to Budget 2019. And with the summer sales coming to an end, buying sentiment was also softer (38% considered it a good time to purchase big ticket items like furniture and electrical goods, down from 41% in August).
The Business Pulse ticked up in September 2018, coming in at 91.8, 1.6 higher than last month and 4.7 higher than a year ago. In terms of the broader operating environment, basic infrastructure (water, waste, energy) was seen as adequate by most firms in Ireland, whereas transport infrastructure scored poorly, especially in Munster and Connacht/Ulster, with telecommunications also scoring poorly outside the capital. Indeed 48% of firms in Connacht/Ulster, 31% in Munster and 34% in Leinster (excluding the capital) rated telecommunications infrastructure as less than adequate.
Business concerns also remain over Brexit implications for the local economy with 78% of firms in Connacht/Ulster, 74% in Munster, 71% in the Rest of Leinster and 66% in Dublin expecting Brexit to negatively impact their region over the next 12 months.
The Housing Pulse softened again in September, with this month’s reading of 107.0 the lowest in two years and down 4.7 on August’s reading. House price expectations were scaled back this month – notably in the capital – though with supply still shy of demand, the majority of households in Dublin and around the country think prices will increase over the coming year. Housing is also a concern for businesses, with the September survey finding that half of firms in Dublin and Munster, 44% in the Rest of Leinster and 38% in Connacht/Ulster view the housing infrastructure in their region as inadequate, which is a problem when it comes to attracting staff.
The Bank of Ireland Regional Pulses bring together the views of households and firms in the various parts of the country. The 3 month moving averages show that sentiment was down on the month in all regions in September 2018. For firms in Dublin along with those in the rest of Leinster and Munster, investment in housing infrastructure is the priority; while transport and telecommunications come joint first in Connacht/Ulster.
Three month moving averages:
- Dublin Pulse = 98.1 -0.5 points on the previous reading;
- Rest of Leinster = 90.9 -1.2 points on the previous reading;
- Munster = 91.1 -2.9 points on the previous reading;
- Connacht/Ulster = 87.3 -1.0 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 approximately 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.