Irish consumer and business sentiment has partly recovered from the initial shock of the Brexit vote, according to the Bank of Ireland.
The bank’s Economic Pulse monitor rose 2.5 points to 93.7 in August, recouping a quarter of the ground lost in July immediately after the United Kingdom’s referendum result.
“While last month dipped significantly following the Brexit vote, August saw the Economic Pulse recover a quarter of the ground it lost in July,” said Loretta O’Sullivan, chief economist at the bank.
“Although there has been a rise in sentiment, many consumers and businesses are still assessing the potential impact of Brexit. We will be closely monitoring the situation over the coming months.”
The bank’s gauge is based on a survey of 1,000 households and 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.
The sub-index for business rose 2.4 points to 94 in August on the back of a pick-up in confidence among firms in the industry, retail and construction sectors.
The industry and retail pulses saw the largest increases in August (7.7 and 6.1 respectively), while construction was up 4.6 and sentiment among service firms was down marginally by -0.3.
The August findings indicate most firms do not expect to change their selling prices in the near term, the bank said, while pointing to some easing in input costs, excluding labour costs, in the industry and retail sectors over the past three months.
The consumer index rose 2.8 points to stand at 92.5 in August, with households more upbeat about prospects for the economy and unemployment.
Jobless rate
The Irish jobless rate stood at 8.3 per cent in July, revised up from the previous rate of 7.8 per cent, largely because of changes in the size of the labour force. The rate of job creation in the Irish economy continues to accelerate, however.
Half of the consumers surveyed said they expected a general improvement in economic conditions over the next 12 months, while 28 per cent expected no change.
Just over a third said there were confident of a pick-up of their own financial situation over the next 12 months, with 49 per cent expecting no change.
Buying sentiment remains fragile with only slight pick-up in the August figure, with some 34 per cent considering it a good time to purchase big-ticket items such as furniture and electrical goods, up from 32 per cent in July, while two in three indicated they were likely to save some money in the next 12 months.
The bank’s housing index remained largely unchanged with most consumers anticipating price increases over the next 12 months.
At the regional level, Dublin continued to lead the way with 74 per cent expecting price gains, compared with 64 per cent per cent in the Rest of Leinster, 70 per cent in Munster and 54 per cent in Connacht/Ulster.
Similarly, the percentage of respondents expecting rents to rise in the coming year was greater in the capital and Munster.
“Rents are now back above their previous peak and the widespread expectation is that they will rise further over the next 12 months. House price expectations remained in positive territory in August,” Dr O’ Sullivan said.
