Bank of Ireland Economic Pulse up slightly in February
‘Businesses are broadly satisfied with basic infrastructure but expressing dissatisfaction with housing infrastructure across all regions’
- Consumer sentiment takes a hit while Business mood is mixed across sectors
- High level of satisfaction among businesses on basic infrastructure (water, waste and energy), but lower approval ratings outside Dublin for telecommunications
The Bank of Ireland Economic Pulse came in at 90.8 in February 2019. The index, which combines the results of the Consumer and Business Pulses, was up 2.9 on last month but 4.4 lower than a year ago.
This month’s research also took a look at other aspects of the operating environment for businesses regionally across Ireland. The results point to a high level of satisfaction with basic infrastructure like water, waste and energy; lower approval ratings for telecommunications outside of the capital and for transport in Munster and Connacht/Ulster; and a broad level of dissatisfaction with housing infrastructure in all regions.
44% of businesses in Connacht/Ulster said telecommunications in the region were less than adequate, compared to 15% in Dublin. The highest level of dissatisfaction expressed in relation to housing was in Munster, with 46% of businesses saying it was less than adequate, followed closely by 45% in Dublin, 42% in the Rest of Leinster and 39% in Connacht/Ulster. 57% of business respondents in Connacht/Ulster said that transport infrastructure was less than adequate, compared with 20% in Dublin.
Commenting on Bank of Ireland’s February Economic Pulse research, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “After a poor run of readings, the Economic Pulse ticked up a notch in February. It was a bit of a mixed bag this month though, with consumer confidence down sharply and the business mood varying across the sectors. This month’s Pulse survey also took a look at the broader business environment and points to infrastructure headwinds at a regional level, with firms in Connacht/Ulster identifying transport as the number one investment need for their area and housing topping the list elsewhere.
With the UK slated to leave the EU on March 29th and a no deal exit currently the default position (though MPs are now gearing up again to try and prevent this happening), households sounded a strong note of caution about the economy this month. On the business front, the sectoral picture was mixed, though the vast bulk of firms indicated that they expect Brexit to negatively impact the local economy in their region over the coming year.
According to Dr Loretta O’ Sullivan: “With only a few weeks to go to B-Day and things still in flux, Brexit is really hitting home for households. And while it is exercising firms too, they have been working through the implications for longer. Looking ahead, what happens next on this front – good or bad – is likely to impact sentiment.”
- Large drop in the Consumer Pulse in February
- New low for the series
- Households worried about the economy
The Consumer Pulse fell for a fifth month running in February 2019 to 81.0. With fears of a no deal Brexit permeating the air and households increasingly fretful about the economy, the series posted its lowest reading to date this month. Households were also a little more circumspect about their own financial situation compared with last month, and with the post-Christmas sales at an end, buying sentiment softened (one in three considered it a good time to purchase big ticket items such as furniture and electrical goods, down from 39% in January).
“With the Brexit fog still heavy and households on edge about the economy, the Consumer Pulse took another tumble this month,” according to Dr Loretta O’Sullivan.
- Housing Pulse down in February
- Price expectations softer
- Housing infrastructure scores poorly
The Housing Pulse came in at 99.8 in February 2019. This was down 5.7 on last month’s reading and marks a fresh low for the series. While two thirds of households think house prices will rise over the coming year, the share anticipating increases in excess of 5% eased back this month.
“The Housing Pulse was a touch firmer last month but this looks to have been a false dawn with price expectations cooling again this month. The February survey finds that housing is also on businesses’ radar, with just over two in five rating the existing infrastructure in their region as inadequate and firms in Dublin, the Rest of Leinster and Munster citing it as the priority area for investment to help strengthen local economies and the business environment,” Dr Loretta O’Sullivan said.
- Business Pulse rises in February
- Sentiment mixed across the sectors
- Brexit and infrastructure headwinds
The Business Pulse stood at 93.3 in February 2019, up 5.3 on last month but 0.9 lower than a year ago. The sectoral picture was mixed this month, with the Industry and Services Pulses gaining ground (this comes after soft readings around the turn of the year) but the Retail and Construction Pulses giving up some. Over eight in ten businesses expect Brexit to negatively impact the local economy in their region in the next 12 months.
The Bank of Ireland Regional Pulses combine the views of households and firms around the country. The readings for February 2019 (3 month moving average basis) were relatively subdued amid Brexit worries, with infrastructure also a concern.
Three month moving averages:
- Dublin Pulse = 89.1 +0.2 points on the previous reading;
- Rest of Leinster = 89.6 -0.3 points on the previous reading;
- Munster = 90.1 +0.1 points on the previous reading;
- Connacht/Ulster = 86.7 +2.0 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.