Bank of Ireland Economic Pulse down in January
‘Brexit Blues’ replaced January Blues as the Economic Pulse rang in the new year more or less where it rang out the old – on a soft note.
- Households gloomier about the economic outlook
- Consumer confidence at lowest point in the series’ history
- Business sentiment holds steady
The Bank of Ireland Economic Pulse came in at 87.9 in January 2019. The index, which combines the results of the Consumer and Business Pulses, was down 0.4 on last month and 4.9 lower than a year ago.
2019 got off to a muted start, with growing fears of a no deal Brexit taking a toll on consumer sentiment in particular. As had been widely anticipated, Prime Minister May’s deal failed to make it through the UK Parliament the first time out. This month saw households downgrading their assessment of the economic outlook once again, while the mood among firms remained subdued.
Commenting on Bank of Ireland’s January Economic Pulse research, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “It was less a case of the January blues and more a case of the Brexit blues this month. Reflecting this, the Economic Pulse rang in the new year more or less where it rang out the old – on a soft note.
Uncertainty about how the UK will leave the EU has reached fever pitch in recent weeks, with talk of a no deal Brexit to the fore. The analysis published last week by the Central Bank shows that a disorderly Brexit is an especially bad outcome for the Irish economy. Households are well aware of this, as their gloomier assessment of economic prospects in this month’s Pulse survey testifies.
On the business front, sentiment held steady in January but remains at a low ebb. The squeeze on exporters is continuing, with the pound falling to over 90p against the euro at the end of last year amid the heightened political drama in the UK, albeit it has recovered some ground since.”
With households worried about the impact of a no deal Brexit on the economy, the Consumer Pulse hit a series low in January.
- Consumer Pulse down in January
- Lowest reading in series’ history
- Brexit concerns to the fore
The Consumer Pulse stood at 87.7 in January 2019, down 1.6 on December and 12.3 on a year ago. Households were gloomier about economic prospects this month, with the balance of positive and negative responses tipping into the red for the first time in three years. Their assessment of their own financial situation was little changed on the month though and, with the winter sales underway, 39% considered it a good time to purchase big ticket items like furniture and electrical goods while 29% are likely to buy a car in the next 12 months.
Having softened over the course of 2018, the Housing Pulse was a touch firmer at the beginning of this year.
- Housing Pulse up in January
- House prices and rents in positive territory
- 73% think it is cheaper to buy than rent in their area
The Housing Pulse came in at 105.5 in January 2019. This was 4.7 higher than last month’s reading but 11.7 lower than a year ago. The share of households expecting house prices to rise by more than 5% over the coming year ticked up this month – particularly in Dublin – which helped boost the headline index. The January survey also finds that almost one in ten is planning on buying or building a property in the next 12 months, while just over a quarter are likely to spend a large sum of money on home improvements or renovations.
On the wage front, 44% of firms are planning on increasing basic pay over next 12 months, while 47% of workers are expecting a pay rise.
- Business Pulse flat in January
- Brexit woes but growth ambitions hold up
- Pay increases in prospect
At 88.0 in January 2019, the Business Pulse was flat on the month but down 3.0 on a year ago. The Industry and Services Pulses posted softer readings this month, while the Construction Pulse was broadly unchanged, and the Retail Pulse gained a little ground. Brexit uncertainty continued to weigh on sentiment, with the weak pound also impacting the competitiveness of firms selling into the UK market and contributing to some easing in export orders in the industry and services sectors. More positively though, the January data show that almost two thirds of businesses remain on a growth trajectory and have ambitions to expand – some aggressively, some more cautiously – over the next 1 to 3 years.
The Bank of Ireland Regional Pulses bring together the views of households and firms in the different parts of the country. The 3 month moving averages show that sentiment was down in Dublin, the Rest of Leinster, and Connacht/Ulster in January 2019 but up a little in Munster.
Three month moving averages
- Dublin Pulse = 89.0 -3.3 points on the previous reading;
- Rest of Leinster = 89.9 -1.6 points on the previous reading;
- Munster = 90.0 +0.7 points on the previous reading;
- Connacht/Ulster = 84.6 -0.4 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 approximately 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.