Bank of Ireland Economic Pulse Rises in June
• Consumer Pulse tracks higher as economy re-opens
• 47% of firms believe activity will increase in next 3 months
• Just over half of households expect house prices to fall over the coming year
The Bank of Ireland Economic Pulse stood at 56.3 in June 2020. The index, which combines the results of the Consumer and Business Pulses, was up 12.4 on last month but 34.4 lower than a year ago.
While COVID-19 concerns persist among Irish households and firms, the process of re-opening the economy is now underway. Phase one began on May 18th and phase two on June 8th, and with the Government signalling its intention to fast track a series of relaxation measures originally envisaged for later in the roadmap, the Consumer and Business Pulses tracked higher this month.
The Business Pulse rose for a second month running in June. Expectations for business activity and hiring intentions for the period ahead were up and firms in the Industry and Services sectors reported some improvement in export order books. The Consumer Pulse, which was broadly flat last month, rose in June with financial worries and concerns about job security easing and buying sentiment improving.
Commenting on Bank of Ireland’s June Economic Pulse, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “The June data confirms that a rebound in sentiment is underway, following on from the improvement seen in May, with consumer and business confidence both rising this month. It is early days though and, so far, the Economic Pulse has only recouped just under half the losses it sustained in the wake of the COVID-19 outbreak.
“This isn’t too surprising given the unprecedented scale of the recent shock triggered by the public health emergency. But as the economy springs back to life and re-boots over the coming weeks and months, with more shop front shutters being raised and more people returning to work, sentiment should continue to strengthen.”
“With the country exiting lockdown, near-term expectations for business activity were back in the black this month.”
• Business Pulse firmer in June
• 47% of firms think activity will increase in the next 3 months
• One in five businesses plans on hiring staff, led by the services sector
The Business Pulse rose for a second month running in June. At 55.9, the index was up 14.4 on May’s reading but down 34.9 on a year ago. The jump was broad based, with the Industry, Services, Retail and Construction Pulses all rising this month. Unsurprisingly spirits were low in respect of business activity over the past while, but with the economy beginning to re-open and the Government accelerating the timetable for easing the COVID-19 restrictions, expectations for business activity and hiring intentions for the period ahead were revised up. And with Ireland’s main trading partners now also coming out of lockdown, firms in the industry and services sectors reported some improvement in export order books in June.
“The rebound in consumer confidence gathered pace this month, with buying sentiment also edging up.”
• Consumer Pulse up in June
• 28% of households think the economy will get better in the next 12 months
• 33% expect unemployment to come down
The Consumer Pulse came in at 58.0 in June 2020, up 4.0 on last month but down 32.6 on this time a year ago. Households remained very gloomy about the current economic situation this month, but with the COVID-19 restrictions starting to be lifted they were a little less pessimistic about prospects for the coming year. Financial worries and concerns about job security also eased in June as some people returned to work, while buying sentiment ticked up another notch (21% considered it a good time to make major purchases, compared with 16% in May and a low of 13% in April).
“After stabilising in May, the Housing Pulse increased in June but remains well off its pre-COVID level.”
• Housing Pulse rises in June
• Stronger prints in all regions
• Around one in two households still expect house prices to fall
The Housing Pulse recovered some ground in June 2020, coming in at 32.9. This was 7.6 higher than last month but 66.5 lower than a year ago. The share of households expecting house prices to fall in the next 12 months stood at just over half in June – down from almost three in five in May – but with only one in six anticipating price gains, the balance of responses remained in firm negative territory. Expectations for future rent increases were also in the red this month, albeit only marginally so.
The Bank of Ireland Regional Pulses bring together the views of households and firms from around the country. The results for June 2020 show that sentiment was down on the month in Dublin, as well as in the Rest of Leinster, Munster and Connacht/Ulster. As the Regional Pulses are calculated on a 3 month moving average basis, the large drop in confidence in April – which marked the height of the COVID-19 disruption to normal everyday life and economic activity – is still having an impact and is more than offsetting the subsequent rebound in consumer and business confidence in all regions.
Three month moving averages:
• Dublin Pulse = 40.4 -4.0 points on the previous survey;
• Rest of Leinster = 48.4 -4.9;
• Munster = 48.1 -4.8;
• Connacht/Ulster = 41.4 -6.6.