Consumer and business sentiment down slightly in July but still above pre-pandemic level
Consumer and business sentiment, as measured by Bank of Ireland’s Economic Pulse, dipped slightly in July but was well up on the situation a year ago.
At 89.3, the headline figure also remained above its pre-pandemic level.
The Delta variant of Covid, as well as the delay to the resumption of indoor hospitality may have contributed to the slight softening in sentiment in the month, it is understood.
“While concerns about the new strain of the virus tempered expectations a bit, households were more upbeat about the current state of the economy this month,” Loretta O’Sullivan, Group Chief Economist with Bank of Ireland, noted.
“Labour market sentiment has also improved as the re-opening of the country has progressed, with two fifths of survey respondents indicating that it is easy to find or change jobs at present – up from 18% at the beginning of the year – and two in five workers anticipating a larger pay packet over the next 12 months,” she added.
On the business side, sentiment was little changed in July after a run of gains in previous months.
The four main sub-indices – Industry, Services, Retail and Construction – remained above their pre-pandemic levels.
44% of firms say they plan to increase pay over the coming year.
That is up from 29% in April and is understood to have been driven in part by concerns around staffing shortfalls as the recovery takes hold.
“Pandemic related disruption is not over yet, with various bottlenecks becoming apparent and impacting a range of sectors,” Loretta O’Sullivan said.
“Over a quarter of the businesses surveyed said they are struggling with material, equipment and space shortages, for example. Labour shortages are a concern for another one in four and with firms looking to retain and attract staff, some upward pressure on pay appears to be in prospect over the coming year.”
The Housing Pulse recorded the 15th consecutive gain in July and is now just shy of its all time high.
Four in five households think house price increases are on the cards over the next 12 months, with almost half – 45% – expecting them to go up by more than 5%, the survey found.
The Bank of Ireland Economic Pulse is conducted in conjunction with the European Commission, with the data feeding into a Europe-wide sentiment study that has been running since the 1960s.