Bank of Ireland Economic Pulse Rises in July
Business Sentiment Increases but Consumer Confidence Stalls
- Business Pulse rises for third consecutive month
- Consumer Pulse pauses amid economic and virus concerns
- Households nationwide upgrade house price expectations
The Bank of Ireland Economic Pulse stood at 61.8 in July 2020. The index, which combines the results of the Consumer and Business Pulses, was up 5.5 on last month but 21.0 lower than a year ago.
While the country has moved into phase three of easing the COVID-19 restrictions, the mood music around the re-opening of the economy has been more unsettled of late. Against this backdrop, the rebound in consumer confidence stalled this month and, even though the Business Pulse tracked higher, firms were generally more circumspect about near-term prospects for activity.
The Business Pulse rose for a third consecutive month in July, with higher readings recorded in all sectors. However there was a slight dip in July’s Consumer Pulse, with concerns around COVID-19 persisting and the new Government’s shaky start doing little to boost confidence.
Commenting on Bank of Ireland’s July’s Economic Pulse, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “The Economic Pulse rose for a third month running in July, although the underlying picture was mixed. The move to Phase 3 of the re-opening roadmap helped raise business sentiment but with public health officials pointing to worrying trends relating to the virus and speculation that the move to Phase 4 may be postponed, the rebound in household confidence stalled.
Consumer sentiment data for the US, the Euro area and the United Kingdom show a similar pausing in July and clearly illustrate that the process of rebooting economies across the world will not be perfectly smooth. The additional stimulus package just announced by the Government should help, though medical advances in the battle against COVID-19 remain vital.”
“The rebound in business sentiment continued in July, with the sectoral Pulses all up on the month.”
- Business Pulse rises in July
- Construction Pulse leads the way
- Services Pulse bringing up the rear
The Business Pulse rose for a third consecutive month in July 2020 to 63.4 (7.5 higher than June’s reading but down 19.8 on a year ago). With the country now in Phase 3 of the re-opening roadmap, firms in all four sectors reported an improvement in trading conditions. Caution on the part of consumers, and mounting speculation about a delay to the move to Phase 4, looks to have tempered expectations for further near-term gains however. Retailers and firms in industry and services were a bit more downbeat about prospects for business activity over the next three months, with the latter also scaling back hiring plans for the time being.
“As in other countries, the recovery in consumer confidence stalled this month.”
- Consumer Pulse softer in July
- Households concerned about the economy
- But buying sentiment nudges up
The Consumer Pulse stood at 55.5 in July 2020, down 2.5 on last month and 26.0 lower than a year ago. Worries about the weak state of the economy were to the fore this month amid an uptick in virus cases and a shaky start for the new government. More positively though, the share of households saying that they are holding out on spending eased to 55% (from 61% at the height of the crisis), while one in four considered it a good time to purchase big ticket items (up from a trough of 13% in April).
“With economic life resuming, house buying and house selling sentiment both edged higher in July.”
- Housing Pulse much firmer in July
- 41% think it is a good time to buy (up from 30% in April)
- Three in ten likely to spend big on home improvements or renovations
At 50.4 in July 2020, the Housing Pulse was up 17.5 on last month but down 42.1 on a year ago. Households in all regions upgraded their expectations for future house price gains this month, though the balance of positive (26%) and negative (37%) responses remained in the red. The survey also finds that 31% are likely to spend a large sum of money on home improvements or renovations over the coming year. This was somewhat higher than normal, possibly because of some re-purposing of holiday savings in light of the COVID-19-related restrictions around foreign travel and reflecting the need for better home working set ups.
The Bank of Ireland Regional Pulses bring together the views of households and firms around the country. The results for July 2020 (3 month moving average basis) show that sentiment was up on the month across the board.
Three month moving averages:
- Dublin Pulse = 53.3 +12.9 points on the previous survey;
- Rest of Leinster = 59.2 +10.7;
- Munster = 53.9 +5.8;
- Connacht/Ulster = 51.9 +10.6.
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.