Consumer sentiment remains low, but sentiment is boosted by sunny weather and expected government support

Consumer sentiment recovered slightly this month as households enjoyed the late summer heatwave and awaited government support for the forthcoming budget, according to the Bank of Ireland’s latest Economic Pulse Index.

The monthly survey showed that consumer confidence moved away from an all-time low, although it remained subdued from a year earlier.

The Consumer Pulse rose 4.9 points to 48.4 in July. Consumers have been less upset about the current state of the economy and their own finances as they await the budget, which is due to be announced next month.

Despite the rise, it remained 32.6 points lower than August 2021 and is just below the low recorded during the peak of the Covid-19 pandemic.

Consumers were also cautious this month – only 15 percent felt it was a good time to invest in larger items like furniture and electronics.

The overall index score rose 2.1 points to 72.4 in July, down 16.4 points from the same month in 2021.

The corporate index also rose slightly compared to July to 78.4 points. Stimulus in industry and construction fell in August, while services and retail proved to be the strongest performers, growing in line with consumer sentiment.

Some companies reported a slight decrease in non-labour input costs, with the number of companies reporting an increase in costs falling from 86 percent to 83 percent.

As some of the cost pressures eased, the number of companies planning price increases fell slightly, with 57 percent of respondents planning to increase their prices. This was down 2 percent from the July survey.

“As households expect the budget to provide some support for their pockets and businesses see some easing in non-labor costs, sentiment was a little better this month and economic pulse picked up for the first time since May,” said the Bank of England’s chief executive Ireland economist Loretta O’Sullivan said.

However, more people are now expecting rents and house prices to rise. Nationally, 68 percent expect home prices to rise, up 4 percent from July. Meanwhile, just over seven in ten respondents believe rents will rise as well.

Despite “uncertain times” since the easing of pandemic restrictions, Ms O’Sullivan said employment in Ireland had rebounded strongly.

According to the Labor Force Survey published last week by the Central Statistics Office (CSO), there are now over 2,554,600 employed people in Ireland. The employment rate for people aged 15 to 64 increased over the year from 68.6 percent to 73.5 percent through the second quarter of 2022.

That was the highest employment rate since records began in 1998, according to the CSO.

However, Ms O’Sullivan pointed to external challenges affecting consumer and business confidence in Ireland.

“The recent deterioration in UK-EU relations is a headwind and elevated global energy prices as a result of the war are contributing to inflation. Pressure on household purchasing power and the uncertain environment for businesses have dampened confidence,” she said. Consumer sentiment remains low, but sentiment is boosted by sunny weather and expected government support

Fry Electronics Team

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