Ireland Economic Confidence Showing Mixed Picture

Consumer confidence was little changed in May, according to the latest sentiment index compiled by Bank of Ireland. The buying climate remained positive with about four in ten consumers thinking now was good time to buy big ticket items like household goods. However, there was a drop in business sentiment in the month, which is particularly pronounced when viewed over the course of the full year.

Loretta O’Sullivan, group chief economist with Bank of Ireland, said the index should be viewed against the backdrop of international events, which are contributing to regional variations in sentiment, RTE reported.

“The consumer reaction was fairly steady over the month. There was an uptick in terms of the current economic situation, led by households in Munster. On the other side, consumers were less sure about their own financial situations, led by households in Connacht/Ulster. Brexit and sterling volatility played a role here. Also, the Central Statistics Office data pointed to employment growth slowing. It’s an area where households are less certain about job security,” she explained.

O’Sullivan said there had been a drop in business sentiment in the month, primarily due to the services sector, which covers areas like IT, hotels and communications, but it merely reversed the increase recorded in the previous month. It was a good month for industry, retail and construction on the other hand. “Construction put in a strong performance in the month, leading the way in terms of jobs and hiring intentions.”

The construction industry also reported higher input costs and expected further pressure on labor costs, which should result in increased costs for house building overall. That feeds into the housing pulse where the majority, about four in five survey participants, expect house prices to rise in the next 12 months. “Distilling it down, about one in two people in Dublin expect house prices to increase by more than 5%. That’s one in three elsewhere,” she concluded.