Bank of Ireland Economic Pulse up slightly in April

Business sentiment rises with Brexit threat delayed, while consumers remain nervous.

  • Sideways move for Consumer Pulse as households continue to be nervous
  • Buying sentiment coming under pressure
  • Business Pulse rises on Brexit delay

29 April 2019 – The Bank of Ireland Economic Pulse came in at 91.3 in April 2019. The index, which combines the results of the Consumer and Business Pulses, was up 1.9 on last month but down 3.5 on a year ago.

The double miss with respect to the UK’s departure from the EU – both the original Brexit date of March 29th and the subsequent April 12th deadline came and went – and the further extension of Article 50 helped lift the business mood this month. Meanwhile households’ continuing nervousness about the economy kept consumer confidence largely in check, with buying sentiment coming under pressure.

Commenting on Bank of Ireland’s April Economic Pulse research, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said:

“The original Brexit date of March 29th and the extended deadline of April 12th have come and gone leaving Irish households and businesses shaken but not overly stirred. With Brexit pushed out, the threat of a no deal outcome has been staved off for now, and firms look to have taken some comfort from this judging by the bounce in business sentiment in April.

“Recent developments haven’t translated into a corresponding uptick in firms’ growth ambitions though and with households also remaining worried about the economy, it seems relief that a cliff edge Brexit has been avoided is tinged with an understanding that unless the impasse in Westminster is broken, the can may just have been kicked down the road.”

Consumer Pulse

Consumer sentiment is treading water at the moment as households wait to see where things go next with Brexit.

  • Consumer Pulse broadly unchanged in April
  • Households jittery about the economy
  • 42% holding out on spending

The Consumer Pulse stood at 83.5 in April 2019, up 0.9 on March’s reading but 14.3 lower than a year ago. Households’ assessment of their own finances and the economy was little changed this month and remained subdued on the whole. With Brexit increasingly clouding the horizon, buying sentiment is also coming under pressure – the April survey finds that just over two in five are holding out on spending because they aren’t sure what way economic policy is going to go (this compares with one in three this time last year).

Housing Pulse

Almost one in ten households is likely to buy or build a property in the next 12 months.

  • Housing Pulse slightly down in April
  • New low for the series
  • 73% think buying trumps renting

At 96.9, the Housing Pulse was down for a third month running in April 2019. House price expectations remained in positive territory in all regions though, as did rent expectations. The April data also show that nearly three in four think it is cheaper to buy than rent in their area when the typical monthly mortgage repayment and the typical monthly rent for similar properties are compared. Indeed, the cost of renting is one of the reasons cited by households planning on buying or building in the coming year, with factors like time of life playing a role too.

Business Pulse

The April survey finds that just under two in five firms are planning on increasing basic pay in the next 12 months.

  • Business Pulse up in April
  • Helped by Brexit delay
  • Three in five firms on a growth trajectory

The Business Pulse came in at 93.3 in April 2019, up 2.1 on last month but down 0.9 on a year ago. While the Services Pulse was broadly unchanged on the month, the Retail, Construction and Industry Pulses all gained ground. With Brexit pushed out, the threat of a no deal outcome has been staved off for now, contributing to the bounce in sentiment this month. Looking further ahead, three in five businesses indicated that they have ambitions to expand over the next 1 to 3 years. This is down a touch on the January figure (63%) and well off the pre UK-EU referendum readings (70% plus) which suggests that the tide hasn’t yet turned when it comes to firms’ assessment of Brexit uncertainty.

Regional Pulse

The Bank of Ireland Regional Pulses bring together the views of households and firms around the country. The readings for April 2019 (3 month moving average basis) show that sentiment was up on the month in all four regions.

Three month moving averages:

  • Dublin Pulse = 91.5 +0.9 points on the previous reading;
  • Rest of Leinster = 89.4 +0.1 points on the previous reading;
  • Munster = 90.2 +1.1 points on the previous reading;
  • Connacht/Ulster = 90.0 +1.7 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.