The Bank of Ireland Economic Pulse has fallen to a two-year low despite consumer confidence rising in October following the support measures announced in Budget 2021.
Business sentiment, however, fell as the war in Ukraine escalated once more and political instability in UK with the swift rise and fall of Liz Truss, adding to existing worries for firms surveyed.
The overall Pulse, which combines the results of the Consumer and Business Pulses, came in at 60.5, down 10.1 on September and 26.1 lower year-on-year.
The Consumer Pulse stood at 45.8 in October, up 3.7 on September but 31.3 lower than a year ago, as households reacted positively to supports such as the €600 electricity credit and double social welfare payments.
Households were also less gloomy about the outlook for the economy and their own finances, but just 14% considered it to be a good time to purchase big ticket items, and close to three in five are continuing to hold off on spending.
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The Business Pulse fell to a 21-month low after dropping 13.6 points in October, with only construction of the four monitored sectors to see improvement, adding 0.5 points for a reading of 75.1.
While retail (69.9) lost 3.9 points, industry (77.7) and services (57.9) fell 8.3 points and 19.5 points, respectively, with firms citing uncertain demand in the services and retail sectors as key factors currently limiting their activity.
Bank of Ireland said firms industry were especially circumspect about their export order books, not least because of the market turmoil and sharp sell-off in the pound triggered by the ‘fiscal event’ in the UK.
More positively, the October survey finds that growth ambitions were steady, with half of firms still planning to expand their business in the next one to three years.
The Housing Pulse also declined 12.6 points to 87.3, 31.5 points lower than a year ago, as households pared back their expectations of price gains following the latest ECB rate hike.
Over half of survey respondents now think prices will increase over the coming year, which is down from around four in five in early 2022. Moreover, almost a fifth are anticipating price falls, up from 4% back in January.
All four Regional Pulses, calculated on a three-month moving average basis, fell as well. While the rest of Leinster (65.9) lost just 0.4 points, Connacht/Ulster (65.4), Dublin (77.8) and Munster (62.8) lost 2.1, 3.2 and 5.6 points, respectively.
The Bank of Ireland Economic Pulse is conducted by Ipsos on behalf of the bank in conjunction with the European Commission. 1,000 households and 1,350 businesses were surveyed on a range of topics, including the economy, their financial situation, spending plans, house price expectations and business activity.
