Two in three households are planning to spend the same or more on holidays this year and firms in the accommodation and food sectors are positive about their prospects for the season.
This is according to Bank of Ireland’s Economic Pulse study. The data also indicates that business sentiment is at a 23-month high, while the Consumer Pulse was up 1.4 on last month and 5.1 higher than a year ago.
Overall, the Bank of Ireland index, which combines both business and consumer sentiment results, was up 2.7 on April’s reading and 5.1 on a year ago.
Discussing the Economic Pulse, Group Chief Economist at Bank of Ireland, Dr. Loretta O’Sullivan, said: “Summer is here and with spirits lifting, two in three households are planning on spending the same or more on holidays this year compared with last year. Firms in the accommodation and food sectors are also positive about prospects for the season and more so than they were this time last year. With the World Cup and a plethora of festivals and other events on the agenda, it is gearing up to be a busy period all round.”
The Business Pulse stood at 97.2 in May 2018, a 23 month high and showing an improvement in sentiment across sectors. This was up 3.0 on April’s reading and 5.1 higher than this time last year. Helped by improving order books, the Industry, Services and Construction Pulses all gained ground this month, while the Retail Pulse was little changed. The May data also point to growing inflationary pressures, related in part to rising oil prices and recent exchange rate developments. 52% of firms in industry and 40% in services reported an increase in non-labour input costs over the past three months for example; well up on the April responses of 44% and 36% respectively. Most businesses still expect to keep their selling prices unchanged in the period ahead though.
Dr. Loretta O’Sullivan commented: “Input costs were a talking point in May. The survey findings point to growing inflationary pressures with more firms reporting an increase in non-labour costs over the past three months. One of the factors behind this is higher oil prices, another is currency moves. Amid continuing geopolitical tensions including the decision by the US to withdraw from the Iran nuclear deal, the price of Brent oil is now running at a 3½ year high of $78 per barrel. Also, the euro has come off the boil recently, particularly against the dollar, reflecting more moderate growth in the Euro area and political developments in Italy.”
The Housing Pulse rose to 116.6 in May 2018 from 116.1 last month. The study shows that while new homes are being built, supply is failing to keep pace with demand. This is putting upward pressure on house prices and fuelling expectations of further gains. This is the case throughout the country, with almost nine in ten households in Dublin, around four in five in the Rest of Leinster and Munster and two in three in Connacht/Ulster expecting prices to increase in the next 12 months.
The survey results also show that rent expectations were in firm positive territory in all regions in May. Some four in ten (38%) are concerned about rising house prices with the same proportion (42%) worried about the cost of renting.