Consumer, business sentiment rise

Households were more upbeat about the economy while there was a mixed reaction from businesses across the country, according the latest Bank of Ireland economic pulse index.

The pulse, which measures consumer and business sentiment, was up in October from last month — however it was considerably lower than the same month last year.

Chief economist Loretta O’Sullivan said: “The uptick in the economic pulse this month looks to be less of a budget bounce than an unwinding of last month’s temporary setback on the consumer side.”

She said the mood among households brightened this month, with business sentiment also improving, albeit she added the picture was mixed across the sectors.

Sentiment rose in Dublin but was down in Leinster, Munster and especially in Connacht and Ulster. More businesses said they would increase wages next year, while two in three hope to expand in the next three years.

The weakness of the pound remains a key concern for firms exporting to the UK with sterling hitting an eight-year low in August before recovering ground, according to Ms O’Sullivan.

“We have also seen the euro appreciate against the dollar. So it is not too surprising that the pulse results show some softening in competitiveness for firms in industry over the past three months,” she said.

Households were more positive about the economic outlook though their assessment of their own financial prospects was little changed.

Ms O’Sullivan added: “The consumer pulse was back on track this month, with sentiment among households picking up after last month’s temporary setback. Households were a focus of Budget 2018, with the USC and income tax changes and increases in social welfare payments supporting disposable incomes and spending power.”

She said as budget measures took effect, they might lead to a shift in consumer confidence. “But as the budget day giveaways didn’t come as much of a surprise and were fairly modest, households’ assessment of their own financial situation was little changed this month, though there may be more of a reaction when the measures start to kick in.”