Bank of Ireland has released its latest Economic Pulse survey which 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 came in at 34.3 in April, the lowest reading in its history. The index, which combines the results of the Consumer and Business Pulses, was down 36.1 on last month and 57.0 lower than a year ago.
Bank of Ireland say while necessary from a public health perspective, the school and non-essential business closures and other containment measures the government has taken to limit the spread of the coronavirus have led to large swathes of the economy shutting down, and with households and firms bearing the brunt and uncertain about the future, consumer and business confidence plummeted this month.
Three in five firms said they expect a further decline in business activity in the coming three months and just over a quarter anticipate having to lay off staff. Three in five households indicated that they are holding out on spending because they are not certain which way economic policy is going to go.
The Consumer Pulse stood at 53.2 in April 2020, down 25.3 on last month and 30.3 on a year ago. Households’ assessment of the economy and their own financial prospects moved deep into the red this month, taking the headline index to an all-time low. With the COVID-19 pandemic very much to the fore, just 13% considered it a good time to purchase big ticket items like furniture and electrical goods (down from 31% last month).
The Business Pulse posted a historic low in April 2020, coming in at 29.6. This was down 38.8 on March and 63.7 lower than a year ago. This month’s readings were weak across the board, with seven in ten firms reporting lower business activity in the recent trading period(led by services and retail).
The COVID-19 outbreak and the policy actions being taken at home and overseas to suppress the virus are affecting businesses through a number of channels – demand, supply chains, operations etc. – and mostly negatively, though around three in ten are seeing some new opportunities.
The Housing Pulse came in at 25.0 in April 2020. This was down 52.4 on last month and marks a fresh low for the series. Expectations for house price gains over the coming year fell sharply this month, and for the first time since sentiment started to be tracked in January 2016, more households now expect prices to decline (55%) than go up (one in seven). The COVID-19 outbreak has imparted a significant shock to the economy and with the government imposing a temporary rent freeze and ban on evictions, households’ expectations for future rent increases also headed into negative territory.
Commenting on Bank of Ireland’s April Economic Pulse, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "This month’s survey findings are grim in the extreme. The Economic Pulse reading is down a whopping 36 points, more than double last month’s drop. With the country more or less in full lockdown, job losses soaring and incomes under pressure, consumer and business confidence both tanked in April."
She added, "The COVID-19 shock is unprecedented and has resulted in a sudden turnaround in the economy’s fortunes. Given this and the huge uncertainty about the path of the virus and the depth and duration of the recession, it is no wonder that households and firms are very uneasy."
Source: www.businessworld.ie
