World Economy

Ireland Consumer Sentiment Up

Consumers are in much more positive mood.Consumers are in much more positive mood.

Consumer confidence continues to rise but businesses appear slightly more pessimistic, according to the latest Economic Pulse from Bank of Ireland for August.

Sentiment among companies softened in the month, according to the study, with thinner order books likely to lead to muted activity and hiring, RTE reported.

Companies appear to be concerned by the impact of Brexit and the weaker pound, though some also expect that to translate to lower import prices in the near future.

However, consumers are in much more positive mood, with three in five now expecting the general economic condition to improve over the next year.

More people also had an improved view on their own finances, with 40% of people considering it a good time to make a big-ticket purchase.

Bank of Ireland Group Chief Economist Loretta O’Sullivan said the “August findings highlight an emerging divergence between households and firms, with a rebound in consumer confidence evident in recent months but business sentiment more subdued.

“While households look to be taking comfort from the improving domestic economy and ongoing job gains, firms remain alert to the clouds on the horizon, with signs of softer activity in the UK and the renewed weakness of the pound of late a reminder of these.”

On housing, the Bank of Ireland research shows two in five people think house prices will rise by more than 5% over the next 12 months.

This has almost doubled from January 2016 (when just 22% were expecting increases of this magnitude), while the share of survey respondents expecting prices to stay more or less the same has almost halved, as the market continues to be characterized by a mismatch between supply and demand.

 Unemployment to Fall

A report on the Irish economy has found that it will reach full employment again by the end of next year. Goodbody says rapid growth in construction and consumer spending will push core domestic demand beyond previous forecasts.

In its latest quarterly Irish Economy Health Check, the financial institution says unemployment will fall to just 5% in late 2018. It says as a result of this, Ireland may need to start relying on immigrant labor to maintain its momentum as one of Europe’s fastest-growing economies.

Goodbody chief economist Dermot O’Leary says: “Employment growth of 3.5% is the most visible evidence of strength in the Irish economy, but inflation pressures are starting to emerge.

Goodbody is raising its forecasts for core domestic demand in 2017 to 4.5% from 3.7% and in 2018 to 4.3% from 3.6%. It says as domestic spending returns to its previous 2007 peak, this will end “the lost decade” that followed the property crash.

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