Bank of Ireland has today released its latest Economic Pulse survey today. The 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.
The Bank of Ireland Economic Pulse stood at 79.1 in August 2019. The index, which combines the results of the Consumer and Business Pulses, was down 3.7 on last month and 12.2 lower than a year ago.
With Boris Johnson taking up office as UK Prime Minister and raising the stakes on the Brexit front, and the Central Bank here publishing estimates of the damage a no deal departure would potentially do to the Irish economy in the short term, Bank of Ireland say the mood among households and firms was gloomier this month and the Economic Pulse hit a new low.
The Consumer Pulse came in at 76.0 in August 2019. This was down 5.5 on last month and marks a new low for the series. Brexit uncertainty is continuing to fray nerves and prompted households to further scale back their assessment of the economy’s prospects this month.
The buying mood was also softer in August despite the summer sales, whereas savings sentiment was a touch firmer. Thirity two percent considered it a good time to purchase big ticket items such as furniture and electrical goods, while 73% indicated that they are likely to put money aside in the next 12 months.
The Housing Pulse continued on its downward trajectory in August 2019, coming in at 82.1. This was 10.4 lower than last month’s reading. While house price inflation and expectations have been softening for some time amid increasing supply and stretched affordability in parts of the country (making the Central Bank’s mortgage rules more binding), heightened uncertainty is also becoming a factor. Brexit and what it might mean for the economy is unsettling households and builders alike, with speculation about the future of the ‘Help to Buy’ incentive for first buyers rife as well.
The Business Pulse stood at 79.9 in August 2019, down 3.3 on last month and its weakest print to date. While the Industry Pulse was little changed, the Retail and Construction Pulses took quite a tumble this month and the Services Pulse eased back as firms downgraded their near-term expectations for business activity and hiring.
Fears of a no deal Brexit come October have risen tempering the general mood, with the lack of clarity around domestic policy measures like ‘Help to Buy’ also weighing on building sentiment. More positively, the August survey points to some easing in non-labour input cost pressures over the past three months for firms in the industry, services and construction sectors as the weak pound feeds through to lower import prices.
Commenting on Bank of Ireland’s August Economic Pulse research, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "The Economic Pulse headed south again in August and sentiment could remain ropey for a while yet given the unsettled Brexit backdrop. At the time of last month’s survey, Boris Johnson hadn’t been confirmed as UK Prime Minister but that expectation was enough to knock sentiment."
She added, "When this month’s survey was conducted, he was in situ and upping the ante with his ‘Do or Die’ approach to Brexit. As the recent Central Bank and our own Bank of Ireland analyses show, if the UK leaves the EU without a deal at the end of October, the Irish economy could suffer badly. So households and firms are understandably worried and unsurprisingly consumer and business confidence took another hit in August."