The Bank of Ireland ‘Business Pulse’ sentiment index improved to 73.0 in November from 64.2 in October, with the Services and Construction indices both moving forward.
The bank said the Retail index was a touch firmer as well, albeit the survey findings point to a more muted Christmas trading period than usual, as two thirds of retailers expect their turnover to be the same or higher than last year versus 85% in the pre-pandemic era.
The data shows that one third of responding firms intend to increase spending in 2023 compared with this year, with the replacement of worn-out plant and equipment, expanding production capacity, streamlining processes and meeting sustainability and other objectives all on the agenda.
The Pulse surveys are conducted by Ipsos on behalf of Bank of Ireland with 1,000 households and 1,350 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.
Loretta O’Sullivan, group chief economist for Bank of Ireland, said the bank is expecting a better outcome for Ireland’s economy in 2023 that the official forecasts, with GDP growth of 4.0% pencilled in.
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At 44.3, the bank’s ‘Consumer Pulse’ was down 1.5 on October’s reading and 30.9 lower than a year ago.
Households were uneasy about the jobs outlook and the cost of living as they reined in their Christmas shopping plans.
The Consumer Pulse (44.3) fell 1.5 points month-on-month and is now down 30.9 points from a year ago, with 56% of respondents now expecting unemployment to increase over the next year, up from 49% last month.
Three in five households said they intend to spend the same or more on presents this year compared with last, down from three in four in 2021.
“The latest survey findings are a mixed bag, with the Consumer Pulse down on the month and the Business Pulse up," O'Sullivan added.
"While the Irish economy has been benefitting from the removal of pandemic-related restrictions and strong employment growth this year, the war in Ukraine has had a knock-on effect to inflation. It has also led to a global slowdown. This is a headwind for exporting sectors including ICT, and the news of layoffs in some high profile tech companies may have unsettled households this month."
Elsewhere, a survey of members by the Irish Hotels Federation has found that for January to October 2022, average room occupancy levels were 71% nationally and 75% for Dublin. Other findings:
- 60% report reduced bookings from GB versus 2019 (5% report an increase, 35% no change).
- 47% report reduced bookings from Northern Ireland (12% report an increase, 41% no change).
- 38% report reduced bookings from the rest of Europe (20% report an increase, 42% no change).
The US market is a cause for less concern, with 36% reporting reduced bookings largely offset by the 35% reporting an increase (29% no change).
IHF president Denyse Campbell commented that the 2023 increase in the hospitality VAT rate from 9.0% to 13.5% will mean that consumers and overseas visitors will be paying the third highest tourism VAT rate in Europe.
“Countries that take tourism seriously have much lower tourism VAT rates - for example Portugal (6%), Malta (7%) and Netherlands (9%). In these countries it is settled policy to support tourism with a lower VAT rate as its contribution to supporting jobs, businesses and the wider economy pays its way many times over,” she added.
“We should now be seeking to restore and grow tourism, and not undermine it with a VAT rate hike – particularly when business costs are skyrocketing, inflation is soaring and the global economy edges towards recession."
The IHF survey involved a sample of 122 hotels representing 11,500 rooms.
(Pic: Getty Images)
