Economic Pulse holds steady in June as the re-opening beds down

After a run of strong gains, the Economic Pulse held steady in June
Growing positivity among firms about the current business environment
Consumer confidence down slightly on the month

The Bank of Ireland Economic Pulse came in at in 89.7 in June 2021. The index, which combines the results of the Consumer and Business Pulses, was 0.2 higher than last month and up 33.4 on a year ago.

Recent weeks have seen further progress on the re-opening front – all retail is now back in action, accommodation services have resumed and outdoor hospitality is underway. But with the headline index already running above its pre-pandemic level after a number of months of strong gains, it was very much a case of steady as she goes for economic sentiment in June, with the Business Pulse up a notch on the month and the Consumer Pulse down a touch.

Commenting on the June Economic Pulse, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “After a string of strong gains, the Economic Pulse held steady in June. The Consumer and Business Pulses were little changed this month, though looking at the components, expectations appear to have taken a step back, having done a lot of the heavy lifting to date, while current conditions took a step forward as the resumption of economic and business activity is no longer a hope but is materialising.

“Whether concerns around the Delta variant of the virus delay the move to the next phase of the re-opening plan remains to be seen, but with economic sentiment back above its pre-pandemic level, it’s clear that the vaccination roll-out has done much to bolster confidence among both households and firms in recent months.”

Business Pulse

“Firms were more upbeat about the here and now this month, lifting the Business Pulse.”

Business Pulse increases in June
Economic re-opening becoming embedded
Costs up for three in five firms

The Business Pulse came in at 93.1 in June 2021, up 0.4 on last month and 37.2 higher than a year ago. The Industry, Retail and Construction Pulses ticked up this month and even though the Services Pulse was a tad softer (the lifting of restrictions on hospitality is lagging other areas), all four sectoral indices are now above their pre-pandemic levels. The June data point to growing positivity among firms about the current business environment, with improving order books / sales translating into jobs – some 15% indicated they had increased employment in the past three months and over a fifth expect to do so in the period ahead – though rising non-labour input costs are a concern.

Industry Pulse = 100.0 +3.1 points on the previous survey;
Services Pulse = 91.9 -0.5;
Retail Pulse = 89.6 +0.7;
Construction Pulse = 97.0 +1.2.

Consumer Pulse

“The Consumer Pulse took a breather this month following a run of solid gains.”

Consumer Pulse down slightly in June
Buying sentiment holds up
One in two expects unemployment to fall in the next year

The Consumer Pulse stood at 76.2 in June 2021, 0.5 lower than last month but 18.2 higher than a year ago. The further easing of restrictions prompted households to upgrade their assessment of the current economic situation this month, though they were a little more circumspect about the outlook amid some disquiet about variants of the virus. That said, more than half still think the economy will get better over the coming year. The June survey also finds that three in ten households consider it a good time to purchase big ticket items like furniture and electrical goods.

Housing Pulse

“The Housing Pulse rose again in June, hitting a three year high in the process.”

Housing Pulse strengthens in June
81% expect house prices to rise over the coming year
Three quarters think rents will go up

The Housing Pulse rose for a fourteenth consecutive month in June 2021, to 116.3. This was 4.0 higher than last month’s reading and up 83.4 on a year ago. Four out of five households now think house prices will increase in the next 12 months, with Dublin leading the way at 85%, followed by Munster at 83%, the Rest of Leinster at 78% and Connacht/Ulster at 76%. This upward trend in price expectations owes much to the continuing gap between housing demand and supply, a backdrop that contributed to the upping of rent expectations this month too.

Regional Pulse

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

Three month moving averages:

Dublin Pulse = 88.5 +4.5 points on the previous survey;
Rest of Leinster = 87.8 +8.2;
Munster = 87.3 +4.5;
Connacht/Ulster = 89.9 +4.0.