Telecoms is now the top priority for businesses

With most employees now working from homes, telecoms overtakes housing as a top priority for business owners.

The Bank of Ireland Economic Pulse came in at 65.1 in September and has now recovered almost 60pc of its Covid-related losses. The index, which combines the results of the Consumer and Business Pulses, was up 5.8 on last month but down 11.1 on a year ago.

With many employees still working from home, almost a third of firms identified telecommunications as the priority area for infrastructure investment in their region. This is up sharply from the pre-Covid (February) figure of 18pc and puts it ahead of housing which typically occupies the top spot.

“Telecommunications pipped housing to the post this month as the priority area businesses identified for infrastructure investment”

The improvement in the Economic Pulse this month comes on foot of a rebound in the Business Pulse after a dip last month.

Sentiment rose in all four sectors – industry, services, retail and construction – though Brexit was back on firms’ radar as the end of the transition period approaches and the talks on the future UK-EU trade relationship floundered. For households, the heightened uncertainty on this front added to growing concerns about the virus and kept the Consumer Pulse at a low ebb in September.

“The underlying picture was mixed though,” says Dr Loretta O’Sullivan, group chief economist for Bank of Ireland. “For firms, it was a case of moving on from last month’s re-opening setbacks and getting back to business, whereas consumers remained cautious in the face of the resurgence in the virus.

“Telecommunications pipped housing to the post this month as the priority area businesses identified for infrastructure investment, reflecting the ongoing pattern of working from home and emphasising the importance of the National Broadband Plan.

“Brexit was on minds this month too, albeit the September survey was largely conducted before the UK’s Internal Market Bill really put the cat among the pigeons. Local lockdowns have been imposed on Dublin and Donegal now too, which will also test resolves as we head into the final quarter of the year.”

“Brexit was on minds this month too, albeit the September survey was largely conducted before the UK’s Internal Market Bill really put the cat among the pigeons. Local lockdowns have been imposed on Dublin and Donegal now too, which will also test resolves as we head into the final quarter of the year.”

Business Pulse

“There was a broad-based improvement in business sentiment this month, but Brexit is a concern for firms in all sectors,” said O’Sullivan.

With ‘wet’ pubs getting the go-ahead to re-open, much of the economy is now someway operational again (local lockdowns aside).

Physical distancing requirements and other guidelines have forced firms to move some activities online however, while working from home where possible remains a key part of government advice.

Telecommunications infrastructure has come under pressure as a result, with almost a third of the firms surveyed in September identifying it as the priority area for public investment in their region.

The September survey also finds that escalating tensions between Downing Street and the EU are a concern for businesses, with three in four firms expecting the fallout from the UK’s decision to leave the EU to negatively impact the local economy in their region over the coming 12 months (Connacht/Ulster is higher at four in five).

Consumer Pulse 

“September was another month of bumping along the bottom for the Consumer Pulse,” said O’Sullivan.

At 52.8 in September 2020, the Consumer Pulse was effectively flat on the month but down 21.6 on a year ago. Households’ take on their own finances and on the current and future state of the economy was little changed this month and remained subdued on the whole amid the resurgence in the virus.

With the lifting of the ‘midlands’ lockdown, households in the Rest of Leinster were a little less downbeat compared with last month though, whereas households in Dublin and Connacht/Ulster were gloomier as the prospect of tighter restrictions loomed large for the former and the souring mood music around Brexit rattled the latter. 

Housing Pulse

“Expectations for future house price gains were up in all regions of the country in September,” O’Sullivan explained.

The Housing Pulse rose for a fifth month running in September 2020, to 62.8. This was up 4.6 on last month’s reading but 12.4 lower than a year ago.

The share of households expecting house prices to rise over the coming year edged higher again this month (to 35pc), while the share anticipating a fall ticked down (to 27pc), meaning the balance of positive and negative responses moved back into the black for the first time since March.

Regional Pulse

The Bank of Ireland Regional Pulses bring together the views of households and firms around the country.

The indices are calculated on a three-month moving average basis and show that sentiment was up across the board in the period July-September compared with the period June-August.

Three month moving averages:

  • Dublin Pulse: 65.7 (up 5 points)
  • Rest of Leinster: 64. (up 1.9 points)
  • Munster: 57.5 (up 0.6 points)
  • Connacht/Ulster: 62.9 (up 4.6 points)

Written by John Kennedy (john.kennedy3@boi.com)

Published: 28 September, 2020