Households more upbeat in May
Economic Pulse dips slightly with business sentiment down and consumer sentiment rising
- Economic Pulse dips in May
- Business sentiment mixed across sectors, while consumer sentiment recovers some ground
- Seven in ten planning to spend same or more on holidays this year versus last year
The Bank of Ireland Economic Pulse stood at 90.2 in May 2019. The index, which combines the results of the Consumer and Business Pulses, was down 1.1 on last month and 7.3 lower than a year ago.
With the UK Parliament in recess over the Easter break and the bank holiday period, the Brexit news flow dried up considerably, providing breathing space for households and helping to lift their mood this month. And with business sentiment softer – albeit mixed across the sectors – the gap that had opened up between the Consumer and Business Pulses narrowed in May. Looking towards the summer, seven in ten households are planning to spend the same or more on holidays this year versus last year.
Commenting on Bank of Ireland’s May Economic Pulse research, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “We’ve seen a mixed picture this month, with the Consumer Pulse doing some catching up and the Business Pulse easing back. The onset of
summer, combined with a lull in Brexit news appeared to lift the mood among consumers. We’re also getting positive soundings from households in relation to their upcoming holiday spend, with seven in ten planning to spend the same or more than last year.
“The dip in Brexit news has come to a dramatic end in recent days though, culminating with Prime Minister May’s resignation last Friday. But the question of how, when and if Brexit will be delivered remains as unclear as ever, which means continued uncertainty ahead and increased volatility for the pound, which has already weakened.”
“Household confidence looks healthy in relation to holiday spending this year”
- Consumer Pulse firmer in May
- Expectations for the economy back in the black
- 20% to spend more online in the next 12 months
The Consumer Pulse recovered some ground in May 2019, coming in at 88.8. This was 5.3 higher than last month but 10.4 lower than a year ago. Households markedly upgraded their assessment of the economy’s prospects this month and were also slightly more positive about their own finances. Buying sentiment ticked up as well, with 36% considering it a good time to purchase big ticket items like furniture and electrical goods (32% in April), while seven in ten are planning on spending the same or more on holidays this year compared with last year.
“While input costs have risen for many businesses, most do not expect to change their selling prices in the near term.”
- Business Pulse down in May
- Mixed sectoral picture
- Non-labour input costs up for nearly half of firms
The Business Pulse came in at 90.6 in May 2019, down 2.7 on last month and 6.6 lower than a year ago. The sectoral picture was mixed however, with a pullback in the Services Pulse (mainly because larger firms were more subdued this month) and the Construction Pulse whereas the Retail and Industry Pulses advanced. In industry, the May survey also finds that the share of firms reporting stocks of finished goods as being above normal for the season was higher than usual. This was the case in February and April too and suggests that businesses worried about supply chain or logistic disruptions in the event of a ‘no deal’ Brexit are engaging in some precautionary stockpiling.
“Housing remains firmly on households’ agenda, with rising prices and high rents a struggle for many.”
- Housing Pulse up in May
- Four in ten concerned about rising house prices
- Cost of renting a worry too
The Housing Pulse picked up to 102.7 in May 2019, from 96.9 in April. The improvement this month comes after a run of soft readings and was broad based in nature – the share of households expecting house prices to increase over the coming year rose in all regions and now stands at three in four in Dublin and in and around the two thirds mark in the Rest of Leinster, Munster and Connacht/Ulster. On the rents side, the results show that expectations were also in firm positive territory throughout the country in May.
The Bank of Ireland Regional Pulse bring together the views of households and firms around the country. The results for May 2019 (3 month moving average basis) show that sentiment was up on the month in Connacht/Ulster, little changed in Munster and down in the Rest of Leinster and Dublin.
- Dublin Pulse = 89.5
– 1.9 points on the previous survey;
- Rest of Leinster = 88.0
- Munster = 90.5
- Connacht/Ulster = 92.9
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.