Bank of Ireland has today released its latest Econmoic Pulse which 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 pulse shows that the mood among households and firms brightened this month even as public health measures were extended again. The prospect of a cautious easing of Level 5 restrictions from early April onwards and widespread vaccination by the autumn – in line with the Government’s recently published ‘Path Ahead’ - looks to have softened the blow , with a pick-up in economic and commercial activity anticipated as the year progresses.
With the vaccine rollout progressing and set to quicken during the second quarter and schools starting to return, households were more upbeat this month. The improvement in sentiment was centred on the economy and jobs; notably the balance of positive and negative responses concerning the economic outlook moved into the black for the first time since February 2020.
Firms in each of the four sectors – industry, services, retail and construction - upgraded their near-term expectations for activity and hiring this month as they looked past the here and now to the re-opening of the economy. Prolonged Level 5 restrictions are taking a toll on many businesses however, as are the new trading arrangements with the UK.
The March survey took a closer look at the latter and finds that three in five firms for whom Brexit is relevant are experiencing supply chain disruptions, while 56% are incurring extra costs. More positively though, around one in seven said that they are seeing new opportunities emerge.
Over three in five households now think house prices will increase in the next year, not least because current construction site closures are a headwind for supply which is already well short of demand. The March data also point to upward momentum on the costs front, with two thirds of builders reporting an increase in non-labour input costs in the past three months, partly because of Brexit-related disruption.
Commenting on the March Economic Pulse, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "The Economic Pulse posted a 13 month high in March as consumers and businesses look to the re-opening of the economy and society. While Level 5 restrictions and vaccine supply issues are causing frustration, there appears to be a growing sense that the setbacks of late are delaying rather than derailing the recovery."
She added, "The forward looking components of the index were key to the move higher this month, with one in two households expecting the economy to get better over the coming year and 44% of firms expecting business activity to increase in the next three months. And while there is further to go, it is encouraging to see that the Economic Pulse has now recovered three quarters of its COVID-related losses."