Football lent a touch of encouragement to consumers and businesses in December, but the housing market continues to weigh on sentiment.
The Bank of Ireland’s latest Economic Pulse Survey rose 3.5 points to 70.7 this month, the second straight monthly rise, pointing to a less gloomy outlook for households and businesses in a year marked by war and rising prices is shaped, comes to an end.
Fewer people believe prices will rise next year and concerns about layoffs in the tech sector have eased as companies reported slowing cost increases and improving order books.
However, a majority (57 percent) believe house prices will increase over the next 12 months, more than in previous months, while three in five people expect rents to increase.
“The World Cup came as the December survey was being conducted, which brought some relief after a difficult year for households and businesses,” said Dr. Loretta O’Sullivan, Group Chief Economist at the Bank of Ireland.
“Domestic living cost pressures and the uncertain external environment have weighed on confidence, with the Economic Pulse hitting a two-year low in October.
“However, the index recovered some ground in November and rose again this month. While this second win in a row is arguably less exciting than Messi’s two goals in the football final, it is welcome and looks more encouraging towards the end of 2022.”
Wirtschaftspuls surveys more than 2,000 people and companies about their views on the economy, housing, personal finances and other topics. It is measured from a baseline of 100 points in January 2016 and reached its highest score (101.3) in May 2016 and an all-time low of 34.3 in April 2020.
Business Pulse – a subset of Economic Pulse – rose 2.5 points to 75.5 despite a decline in retail expectations, although it remains 6.9 lower than in December last year.
Consumer Pulse is at a seven-month high of 51.4 in December, 7.1 higher than last month but still 18.5 lower than a year ago. A large majority of consumers (78 percent) believe prices will rise over the next 12 months, although the figure has fallen from 84 percent in November.
The housing pulse was 90.4, 5.2 higher than November but 27.1 lower than a year ago, with consumers expecting house prices to rise even if the European Central Bank (ECB) hikes interest rates.
AIB chief economist Oliver Mangan has predicted a “challenging year”.
“If the story in 2022 was rising inflation and interest rates, 2023 will likely be about rising recession risks,” Mr Mangan said in a note.
“There is a growing risk that the sharp rise in interest rates and the associated significant tightening of financing conditions against a backdrop of sharp falls in real household incomes due to high inflation will push many economies into recession in 2023.”
His comments echo those of ECB Vice President Luis De Guindos, who told Spain’s young entrepreneurs that the euro zone is facing a “very difficult economic situation” that will test businesses next year.
https://www.independent.ie/business/irish/world-cup-fever-boosts-december-spending-as-housing-worries-linger-42247608.html World Cup fever boosts spending in December as housing concerns linger