Consumer sentiment rallies this month, business sentiment broadly unchanged
31 May 2022 | 0
The Bank of Ireland Economic Pulse came in at 82.7 in May 2022. The index, which combines the results of the Consumer and Business Pulses, was up 1.4 on last month but 6.8 lower than a year ago.
It was a nuanced picture this month, with the Consumer Pulse regaining some lost ground whereas the Business Pulse more or less stalled.
While households remain cautious in the main, the arrival of the holiday season looks to have raised spirits somewhat. The mood among firms was little changed though, with three in five still saying that they are finding it difficult to predict the future development of their business situation at present.
“Having softened in March and April, the move up in the Economic Pulse this month is welcome,” said Dr Loretta O’Sullivan, group chief economist for Bank of Ireland.
“The picture in May was nuanced though, with the Consumer Pulse rallying but the Business Pulse largely unchanged,” she added. “Households are now seeing the €200 electricity credit coming through and many are also benefitting from the reduction in public transport fares. And as we head into the summer season, there appears to be plenty of pent up demand for holidays. Elevated costs remain a challenge for businesses however, with signs that these are starting to impact competitiveness evident in the recent survey data. From an economy-wide perspective, this is something that will need to be monitored.”
“After a hat-trick of declines, the Consumer Pulse staged a rally this month,” Dr O’Sullivan said.
At 55.5 in May 2022, the Consumer Pulse was 4.1 higher than last month but down 21.2 from a year ago. Helped by falling unemployment and the roll-out of government measures to address the cost of living squeeze, households were a little more assured about the economy and their own finances this month. Some 22% considered it a good time to purchase big ticket items like furniture and electrical goods (versus 19% in April), while almost two in five said that they are planning on spending more on holidays this year compared with last year (well up on the pre-pandemic average of a quarter or so).
“The Business Pulse more or less stalled in May but remains above its pre-pandemic level,” Dr O’Sullivan added.
The Business Pulse came in at 89.5 in May 2022, 0.8 higher than last month but down 3.2 on a year ago. While the sectoral Pulses moved in different directions this month – Services and Retail advanced but Industry and Construction softened – the current inflationary environment is a headwind for firms across the board. 87% of businesses reported an increase in non-labour input costs over the past three months in May, though the share expecting to raise their selling prices in the near term eased to 64% (from 67% in April). This may reflect the emergence of competitiveness concerns – a deterioration on this front is evident in the industry survey data of late for firms selling domestically as well as those selling in foreign markets.
- Industry Pulse = 87.3 -2.8 points on the previous survey;
- Services Pulse = 93.5 +1.0;
- Retail Pulse = 79.9 +4.7;
- Construction Pulse = 83.2 -3.3.
The Bank of Ireland Regional Pulses bring together the views of households and firms around the country. The indices are calculated on a 3-month moving average basis and show that sentiment was up in Dublin but down in the Rest of Leinster, Munster and Connacht/Ulster in the March to May period compared with the February to April period.
Three month moving averages:
- Dublin Pulse = 93.4 +1.0 points on the previous survey;
- Rest of Leinster = 74.8 -3.6;
- Munster = 83.9 -2.7;
- Connacht/Ulster = 78.3 -3.0.
Source: About the Bank of Ireland Economic Pulse – The Bank of Ireland Economic Pulse survey is conducted in conjunction with the European Commission, with the data feeding into the EU Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, a Europe-wide sentiment study running since the 1960s. The Economic Pulse surveys are conducted by Ipsos MRBI 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.