Bank of Ireland has released its latest Economic Pulse today. The Pulse 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 survey shows that households in all regions upgraded their expectations for future house price gains this month, though the balance of positive (26%) and negative (37%) responses remained in the red.
The survey also finds that 31% are likely to spend a large sum of money on home improvements or renovations over the coming year. This was somewhat higher than normal, possibly because of some re-purposing of holiday savings in light of the COVID-19-related restrictions around foreign travel and reflecting the need for better home working set ups.
While the country has moved into phase three of easing the COVID-19 restrictions, the mood music around the re-opening of the economy has been more unsettled of late. Against this backdrop, the rebound in consumer confidence stalled this month and, even though the Business Pulse tracked higher, firms were generally more circumspect about near-term prospects for activity.
The Business Pulse rose for a third consecutive month in July, with higher readings recorded in all sectors. However there was a slight dip in July’s Consumer Pulse, with concerns around COVID-19 persisting and the new Government’s shaky start doing little to boost confidence.
With the country now in Phase 3 of the re-opening roadmap, firms in all four sectors reported an improvement in trading conditions. Caution on the part of consumers, and mounting speculation about a delay to the move to Phase 4, looks to have tempered expectations for further near-term gains however. Retailers and firms in industry and services were a bit more downbeat about prospects for business activity over the next three months, with the latter also scaling back hiring plans for the time being.
Worries about the weak state of the economy were to the fore this month amid an uptick in virus cases and a shaky start for the new government. More positively though, the share of households saying that they are holding out on spending eased to 55% (from 61% at the height of the crisis), while one in four considered it a good time to purchase big ticket items (up from a trough of 13% in April).
Commenting on Bank of Ireland’s July’s Economic Pulse, Group Chief Economist for Bank of Ireland, Dr Loretta O’Sullivan said, "The Economic Pulse rose for a third month running in July, although the underlying picture was mixed. The move to Phase 3 of the re-opening roadmap helped raise business sentiment but with public health officials pointing to worrying trends relating to the virus and speculation that the move to Phase 4 may be postponed, the rebound in household confidence stalled."
She added, "Consumer sentiment data for the US, the Euro area and the United Kingdom show a similar pausing in July and clearly illustrate that the process of rebooting economies across the world will not be perfectly smooth. The additional stimulus package just announced by the Government should help, though medical advances in the battle against COVID-19 remain vital."