Bank of Ireland Economic Pulse rises in March as mood brightens among households and firms

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  • Economic Pulse has recovered three quarters of its COVID-related losses
  • One in two households expects economy to get better over coming year
  • 44% of firms expect business activity to increase in next three months
  • Three in five firms for whom Brexit is relevant are seeing supply chain disruptions

Monday 29th March 2021: The Bank of Ireland Economic Pulse came in at 73.7 in March 2021. The index, which combines the results of the Consumer and Business Pulses, was up 5.0 on last month and 3.2 higher than a year ago.

The mood among households and firms brightened this month even as public health measures were extended again. The prospect of a cautious easing of Level 5 restrictions from early April onwards and widespread vaccination by the autumn – in line with the Government’s recently published ‘Path Ahead’ – looks to have softened the blow , with a pick-up in economic and commercial activity anticipated as the year progresses.

Commenting on the March Economic Pulse, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said: “The Economic Pulse posted a 13 month high in March as consumers and businesses look to the re-opening of the economy and society. While Level 5 restrictions and vaccine supply issues are causing frustration, there appears to be a growing sense that the setbacks of late are delaying rather than derailing the recovery. The forward looking components of the index were key to the move higher this month, with one in two households expecting the economy to get better over the coming year and 44% of firms expecting business activity to increase in the next three months. And while there is further to go, it is encouraging to see that the Economic Pulse has now recovered three quarters of its COVID-related losses.”

Consumer Pulse

“The Consumer Pulse rose for a second consecutive month in March as households keep the faith.”

•          Consumer Pulse up in March

•          Expectations for the economy back in the black

•          Almost half think unemployment will fall

The Consumer Pulse stood at 69.8 in March 2021, up 2.6 on last month but 8.8 lower than a year ago. With the vaccine rollout progressing and set to quicken during the second quarter and schools starting to return, households were more upbeat this month. The improvement in sentiment was centred on the economy and jobs; notably the balance of positive and negative responses concerning the economic outlook moved into the black for the first time since February 2020.

Business Pulse

“It was also two in a row for the Business Pulse, with sentiment up in all sectors in March.”

  • Business Pulse firmer in March
  • Lockdown and post-Brexit headaches
  • Firms more optimistic about the outlook

The Business Pulse came in at 74.6 in March 2021, up 5.6 on last month and 6.2 higher than a year ago. Firms in each of the four sectors – industry, services, retail and construction – upgraded their near-term expectations for activity and hiring this month as they looked past the here and now to the re-opening of the economy. Prolonged Level 5 restrictions are taking a toll on many businesses however, as are the new trading arrangements with the UK. The March survey took a closer look at the latter and finds that three in five firms for whom Brexit is relevant are experiencing supply chain disruptions, while 56% are incurring extra costs. More positively though, around one in seven said that they are seeing new opportunities emerge.

Main business impacts of new UK trading arrangements (analysis excludes firms that indicated Brexit is not relevant for their business)

 IndustryServicesRetailConstruction
Reduced demand from UK customers13%19%15%7%
Supply chain disruptions72%41%78%75%
Incurring extra costs67%37%71%69%
Seeing new opportunities16%14%18%8%
No impact12%36%10%16%

Housing Pulse

“Households in every region upped their expectations for future house price gains this month.”

  • Housing Pulse strengthens in March
  • Across the board improvement
  • Building costs head north too

The Housing Pulse rose for an eleventh month running in March 2021. At 97.3, the index was 4.1 higher than February’s reading and up 19.9 on a year ago. Over three in five households now think house prices will increase in the next year, not least because current construction site closures are a headwind for supply which is already well short of demand. The March data also point to upward momentum on the costs front, with two thirds of builders reporting an increase in non-labour input costs in the past three months, partly because of Brexit-related disruption.

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 a bit in Dublin but up in the Rest of Leinster, Munster and Connacht/Ulster in the January to March period compared with the December to February period.

Three month moving averages:

•             Dublin Pulse = 67.5                       -0.8 points on the previous survey;

•             Rest of Leinster = 68.6                 +0.7;

•             Munster = 67.2                              +2.3;

•             Connacht/Ulster = 67.9               +2.6.

About the Bank of Ireland Economic Pulse:

The Bank of Ireland Economic Pulse survey is conducted in conjunction with the European Commission, with the data feeding into the EU Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, a Europe-wide sentiment study running since the 1960s. The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and approximately 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity. 

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