Irish consumers and businesses have clawed back some of the confidence lost in the immediate aftermath of Britain’s vote to leave the EU in June, new data shows, with a third of households now expecting their financial situation to improve over the course of the next 12 months.
Bank of Ireland’s latest monthly ‘economic pulse’ index, just published, shows a reading of 93.7 points for August, 2.5 points up on July’s reading and a recovery of a quarter of the ground lost last month.
A pick-up in confidence amongst firms in the retail and construction sectors drove the improvement in business sentiment, while the consumer ‘pulse’ was aided by households becoming more positive regarding their outlook on the economy and the jobs market.
While Bank of Ireland’s chief economist Dr Loretta O’Sullivan welcomed the recovery in the August index, she warned the full effect of Brexit remains unknown.
“While last month dipped significantly following the Brexit vote, August saw the Economic Pulse recover a quarter of the ground it lost in July.
"Although there has been a rise in sentiment, many consumers and businesses are still assessing the potential impact of Brexit. We will be closely monitoring the situation over the coming months,” she said.
This month saw a pronounced improvement in buying sentiment amongst consumers — 34% of whom considered it a good time to purchase ‘big ticket’ items such as electrical goods and/or furniture.
Two-thirds of survey respondents said they are likely to save more money in the next 12 months.
“The latest data point to reasonably solid saving intentions, especially among younger cohorts and those living in rented accommodation and with family,” Dr O’Sullivan noted.
On a regional basis, households in Dublin, the rest of Leinster and Munster were more positive about the outlook for the Irish economy this month compared to last.
Some 52% in Dublin expect to see an improvement in the general economic situation over the next 12 months, with 47% agreeing in Munster.
Expectations for near-term business activity were also up on July in each of the four provinces.
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