Construction BUSINESS

Bank of Ireland’s latest Economic Pulse shows that consumer confidence rose in August but business sentiment slipped.

Bank of Ireland said the Consumer Pulse was in catch-up mode and moved higher as households upgraded their assessment of both the general economic and their own financial situations.

But the Business Pulse slipped this month as Bank of Ireland said the rebound in sentiment across the four sectors – industry, services, retail and construction – was already complete.

Bank of Ireland’s Economic Pulse came in at 88.8 in August – 0.4 lower than last month but up 29.5 on a year ago.

Coming in with a reading of 90.8 in August, Bank of Ireland said the overall Business Pulse was down 2.1 on July’s reading but 29.9 higher than a year ago.

While the Retail Pulse rose this month, the Construction Pulse moved sideways and the Industry and Services Pulses softened.

It noted that not only are the big gains from the re-opening of the economy mostly behind us, businesses are grappling with pandemic and post-Brexit related bottlenecks.

It noted that not only are the big gains from the re-opening of the economy mostly behind us, businesses are grappling with pandemic and post-Brexit related bottlenecks.

“These are having spill-over effects, with 88% of builders, 78% of firms in industry, 58% of retailers and 53% of services firms reporting an increase in non-labour input costs over the past three months (all of which are near or series highs), and many saying that they are likely to hike selling prices in response,” Bank of Ireland said.

After moving sideways in June and dipping slightly in July, the Consumer Pulse regained traction this month and came in at 81 – 6.2 higher than last month and up 28.1 compared to the same time last year.

Bank of Ireland noted that the improvement was broad-based, with households more optimistic about the economy, their personal finances and job prospects this month.

Several positive developments, including the strong vaccine uptake, the resumption of indoor hospitality and the fall in the numbers receiving the Pandemic Unemployment Payment, helped lift consumer confidence.

55% of households think the economy will get better in the next 12 months, while one in three sees their finances improving, the bank added.

Meanwhile, the Housing Pulse was down 1.5 on the month in August, its first drop since the throes of the pandemic.

But with a reading of 118, the series remained at a high level and was well up (+59.8) on a year ago.

Bank of Ireland said that with demand continuing to outstrip supply, four in five households expect house prices to rise in the next 12 months, while only 5% are anticipating a fall.

Expectations for rents also ticked down slightly this month but remain elevated. Seven in ten respondents think increases are in the offing over the coming year while just 3% think they will ease.

“It was a mixed picture this month, with consumer confidence rising but business sentiment slipping,” commented Dr Loretta O’Sullivan, Bank of Ireland’s group chief economist.

She said this reflects some catch up on the part of households and some pausing for breath on the part of firms.

“It is also the case that the big gains associated with the re-opening of the economy are largely behind us. There has been a substantial easing of public health restrictions in recent months and we are now starting to see the Economic Pulse, and similar indicators in other countries, plateau at relatively high levels,” Dr O’Sullivan said.

Source: RTE