The mood of cautious optimism amongst businesses and consumers as the hospitality sector reopens for indoor dining and drinking today is borne out in the latest survey results.
The Bank of Ireland 'economic pulse' index fell slightly in July with consumer confidence dipping. The index combines the results of the business and consumer surveys in a range of sectors.
The results back up similar survey findings in recent weeks that the early optimism expressed earlier in the year as the vaccination programme was being rolled out has given way to a more cautious approach in the second half of the year.
Delays in the lifting of strict lockdown restrictions and concerns about the spread of the Delta variant have clearly tempered people's outlook.
“The Economic Pulse was marginally softer this month but remains above its pre-pandemic level," Bank of Ireland Chief Economist Loretta O'Sullivan said. "The July findings suggest a mood of cautious optimism as households, firms and the economy navigate their way back to some semblance of normality."
"Pandemic–related disruption is not over yet though, with various bottlenecks becoming apparent and impacting a range of sectors. Over a quarter of the businesses surveyed this month said they are struggling with material, equipment and space shortages for example.
"Labour shortages are a concern for another one in four and with firms looking to retain and attract staff, some upward pressure on pay appears to be in prospect over the coming year.”
The Business Pulse fell slightly in July with the sectoral picture being mixed with the Industry Pulse ticking up, the Services Pulse more or less flat and the Retail and Construction Pulses dipping a little.
On the pay side, the July survey finds that 44% of firms are planning on increasing basic wages in the next 12 months – up from 29% in April and driven in part by staffing shortfall worries as the recovery takes hold.
On the growth front, three in five have ambitions to expand their business in the next one to three years.
The Consumer Pulse saw a bigger fall but remains significantly higher than a year ago. While concerns about the Delta strain of the virus tempered expectations a bit, households were more upbeat about the current state of the economy this month.
Labour market sentiment has also improved as the re-opening of the country has progressed, with two-fifths of survey respondents indicating that it is easy to find or change jobs at present (up from 18% at the beginning of the year) and two in five workers anticipating a larger pay packet over the next 12 months.
On a regional basis, the survey found that business and consumer sentiment was down a little in Dublin but rose in Munster and the Rest of Leinster while remaining flat in Connacht/Ulster.
The housing Pulse recorded its 15th consecutive gain and is now just shy of its all-time high. Four in five households think house price increases are on the cards over the next 12 months, with almost half (45%) expecting them to go up by more than 5%.