Bank of Ireland has released its latest Economic Pulse which is conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and 1,350 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.
The Pulse came in at 88.3 in September 2021. The index, which combines the results of the Consumer and Business Pulses, was 0.6 lower than last month but up 23.1 on a year ago. The September survey suggests that households and firms have taken the Government’s latest re-opening roadmap in their stride.
With much of the economy already back operating and the public health situation under control, the consumer and business mood was little changed on the month and the headline Economic Pulse - which surpassed its pre-COVID reading in May – continued to level off.
This month’s research also examined the broader operating environment that businesses face. The results point to general satisfaction among firms with basic infrastructure such as water, waste and energy. Housing re-emerges as the priority area for infrastructure investment however, ousting telecommunications from the top spot.
With the domestic recovery continuing, households upgraded their assessment of the current economic situation again this month. They were more circumspect about the outlook for the economy and their own pockets though, possibly reflecting some wariness in the run up to Budget 2022 and the phasing out of pandemic-related supports. Buying sentiment was softer this month too as rising prices squeeze purchasing power – some 28% considered it a good time to buy big ticket items, down from almost a third during the summer.
The Business Pulse came in at 90.1 in September 2021, down 0.7 on last month but up 21.8 on a year ago. Sentiment was mixed across the sectors, with the Industry and Retail Pulses easing, the Services Pulse more or less flat on the month and the Construction Pulse up a touch. All four indices remained above their pre-COVID level though. On the costs front, two thirds of firms reported an increase in input costs excluding labour over the past three months, while almost half indicated that they expect to raise their selling prices in the period ahead.
The Housing Pulse was up 0.9 on last month’s reading and 56.0 higher than a year ago. While the recently unveiled ‘Housing for All’ plan aims to increase new home completions to an average of 33,000 per annum during this decade, over three in five builders in the residential sector are currently struggling with material and equipment shortages and half are experiencing labour shortfalls, which suggests the demand-supply gap will not be closed any time soon. Against this backdrop, 83% of households expect house prices to rise over the coming year and 75% (a series high) think rents will go up.
Commenting on the September Economic Pulse, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "The start of September saw restrictions on organised indoor and outdoor events eased but with the large re-opening gains in the rear-view mirror, economic sentiment continued to level off. The ‘return to the office’ is next on the agenda and, judging by this month’s survey findings, appears to have prompted some re-assessment of infrastructure needs."
She added, "When businesses were asked to identify the priority area for investment, 37% said housing and 23% said telecommunications. This is a turnaround from lockdown periods when telecommunications topped the list. The focus on ICT remains higher than before the pandemic though, reflecting the fact that the post-COVID landscape will be different in some respects. The way we work is a case in point."
Source: www.businessworld.ie
