Economic Pulse rises but mixed picture

• Bank of Ireland Economic Pulse up in November
• One third of firms intend increasing investment spend in 2023 compared with this year
• Households more circumspect about prospects for the economy

The Bank of Ireland Economic Pulse came in at 67.2 in November 2022. The index, which combines the results of the Consumer and Business Pulses, was up 6.7 on last month but 16.0 lower than a year ago.

The picture was mixed again this month. Households were uneasy about the jobs’ outlook and with the cost-of-living squeeze putting a dent in Christmas spending plans, the consumer mood was more gloom than cheer as the run-up to the festive season got underway. In contrast, the Business Pulse clawed back some of the ground it lost last month.

Commenting on the November Economic Pulse, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “The latest survey findings are a mixed bag, with the Consumer Pulse down on the month and the Business Pulse up. While the Irish economy has been benefitting from the removal of pandemic-related restrictions and strong employment growth this year, the war in Ukraine has had a knock-on effect to inflation. It has also led to a global slowdown. This is a headwind for exporting sectors including ICT, and the news of layoffs in some high profile tech companies may have unsettled households this month. However, November’s research also finds that 32% of firms expect to spend more on investment in 2023 compared with 2022. Though down from 38% a year ago, this is nonetheless a solid print, and with government supports helping households to mitigate increased energy and other costs, our new forecasts still have GDP growing by 4.0% next year.”

Business Pulse

“November saw the Business Pulse claw back some of the ground it lost in October.”

• Business Pulse rises in November
• Non-labour input cost pressures ease
• Firms lower selling price expectations

The Business Pulse came in at 73.0 in November 2022, up 8.8 on October but 12.3 lower than a year ago. While the Industry Pulse slipped again this month, the Services and Construction Pulses advanced. The Retail Pulse was a touch firmer as well, albeit the survey findings point to a more muted Christmas trading period than usual – two thirds of retailers expect their turnover to be the same or higher than last year versus 85% in the pre-pandemic era. This month’s research also took a look at businesses’ investment plans. The data show that a third intend to increase spending in 2023 compared with this year, with the replacement of worn-out plant and equipment, expanding production capacity, streamlining processes and meeting sustainability and other objectives all on the agenda.

Consumer Pulse

“Pinched pockets appear to be tempering festive cheer among households.”

• Consumer Pulse dips in November
• Households worried about jobs
• Cost-of-living woes continue

At 44.3 in November 2022, the Consumer Pulse was down 1.5 on October’s reading and 30.9 lower than a year ago. Households were more circumspect about prospects for the economy and the labour market this month, with 56% now expecting unemployment to increase over the next year (up from 49% last month). On the buying front, the November survey indicates that Christmas shopping plans have also been reined in. While three in five said that they intend spending the same or more on presents this year compared with last, this is down from three in four in 2021.

Housing Pulse

“The Housing Pulse was down again in November, for a third month running.”

• Housing Pulse softer in November
• 23-month low for the series
• 53% still anticipating house price gains

The Housing Pulse stood at 85.2 in November 2022, down 2.1 on last month and 31.3 lower than a year ago. The Central Bank of Ireland has recently announced a targeted relaxation of its mortgage rules which, all other things being equal, should support the housing market in the period ahead. The changes are occurring in an environment of rising interest rates though and against this backdrop, households remain cautious in their assessment of price developments. While over half think house prices will increase over the coming year, almost one in five thinks they will fall.

Regional Pulse

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 down in Dublin and Munster and little changed in the Rest of Leinster and Connacht/Ulster in the September to November period compared with the August to October period.

Three month moving averages: