Irish business confidence is returning

The latest Bank of Ireland Economic Pulse indicates that business sentiment in Ireland has returned to pre-pandemic levels.

Business sentiment in Ireland is now higher than before the pandemic and more than one-in-two firms are anticipating a near-term pick-up in business activity.

As well as this almost a quarter of Irish businesses expect to employ more people.

“Both the consumer and business mood brightened this month, helped by the baby steps being taken to restart the economy and society”

The Bank of Ireland Economic Pulse, conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and approximately 2,000 businesses, came in at in 85.4 in April 2021. The index, which combines the results of the Consumer and Business Pulses, was 11.8 higher than in March and up 51.1 on last April’s all-time low.

With the virus situation stabilising, inoculations going up, some easing of Level 5 restrictions – the return of in-school education and residential construction – and more expected over the coming months, sentiment among households and especially firms rose again this month. As a result, the Economic Pulse is now fast approaching its pre-pandemic level.

A hat-trick of gains

“The Economic Pulse rose again in April, making it a hat-trick of gains,” said Dr Lorretta O’Sullivan, group chief economist for Bank of Ireland.

“Both the consumer and business mood brightened this month, helped by the baby steps being taken to restart the economy and society and the expectation of a more widespread re-opening as we head into the summer.

“But while households were along for the ride, it was firms who were behind the wheel driving the improvement in the headline index in April. Businesses were also pretty upbeat about growth prospects further out, with three in five having ambitions to expand in the next one to three years, which is in line with the pre-COVID figure.”

Business Pulse

O’Sullivan said: “The Business Pulse led the way this month and is now back above its pre-pandemic level.”

At 88.9 in April 2021, the Business Pulse was 14.3 higher than last month and up 59.3 on a year ago.

The improvement in sentiment was broad based, with all four sectoral Pulses – industry, services, retail and construction – posting higher readings this month amid a modest easing of public health restrictions and the expectation of more to come.

Some 53pc of firms are anticipating a pick-up in business activity in the near term, while almost a quarter expect to employ more people. Three-in-10 also indicated that they are planning on increasing basic pay over the next 12 months, though the majority are set to stay on hold for the time being as they focus on restoring profitability.

  • Industry Pulse = 94.4 (+11.8 points on the previous survey)
  • Services Pulse = 87.8 (+14.2)
  • Retail Pulse = 87.5 (+17.2)
  • Construction Pulse = 90.1 (+12.7)

Consumer Pulse

“The steps being taken to restart the economy and society helped lift the household mood in April,” O’Sullivan said.

The Consumer Pulse rose for a third month running in April 2021 to 71.7. This was 1.9 higher than last month’s reading and up 18.5 on a year ago.

Households were more positive about the economy and their own finances this month, with the share saying that they are holding out on spending easing to 42pc (from 61pc during the first lockdown) and the share considering it a good time purchase big ticket items like furniture and electrical goods ticking up to 28pc.

Housing Pulse

“Even with house prices on the rise, seven in ten think it is cheaper to buy than rent in their area,” O’Sullivan said

The Housing Pulse stood at 107.9 in April 2021, up 10.6 on March and 82.9 higher than last April’s trough. Households in all regions raised their expectations for future house price gains this month, taking the index to its highest level since the autumn of 2018.

The survey also finds that 36pc plan to spend a large sum on home improvements over the coming year, a series high that likely reflects a combination of increased savings and the view that remote or hybrid working will be a feature of the post-COVID landscape for some.

Regional Pulse

The Bank of Ireland Regional Pulses bring together the views of households and firms around the country. The results for April 2021 (3-month moving average basis) show that sentiment was up on the month across the board.

Three month moving averages:

  • Dublin Pulse = 76.0 (+8.5 points on the previous survey)
  • Rest of Leinster = 73.8 (+5.3)
  • Munster = 75.4 (+8.2)
  • Connacht/Ulster = 79.5 (+11.5)

By John Kennedy (john.kennedy3@boi.com)

Published: 26 April 2021

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