Three in five households are holding out on spending
Just one in four think it is a good time to sell a property
The Bank of Ireland Economic Pulse came in at 34.3 in April, the lowest reading in its history. The index, which combines the results of the Consumer and Business Pulses, was down 36.1 on last month and 57.0 lower than a year ago.
While necessary from a public health perspective, the school and non-essential business closures and other containment measures the government has taken to limit the spread of the coronavirus have led to large swathes of the economy shutting down, and with households and firms bearing the brunt and uncertain about the future, consumer and business confidence plummeted this month.
Three in five firms said they expect a further decline in business activity in the coming three months and just over a quarter anticipate having to lay off staff. Three in five households indicated that they are holding out on spending because they are not certain which way economic policy is going to go.
Commenting on Bank of Ireland’s April Economic Pulse, Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland said:“This month’s survey findings are grim in the extreme. The Economic Pulse reading is down a whopping 36 points, more than double last month’s drop. With the country more or less in full lockdown, job losses soaring and incomes under pressure, consumer and business confidence both tanked in April. The COVID-19 shock is unprecedented and has resulted in a sudden turnaround in the economy’s fortunes. Given this and the huge uncertainty about the path of the virus and the depth and duration of the recession, it is no wonder that households and firms are very uneasy.”
“With the economy and the labour market going into reverse, consumer confidence tumbled in April.”
•Consumer Pulse falls sharply in April
•Buying sentiment hard hit
The Consumer Pulse stood at 53.2 in April 2020, down 25.3 on last month and 30.3 on a year ago. Households’ assessment of the economy and their own financial prospects moved deep into the red this month, taking the headline index to an all-time low. With the COVID-19 pandemic very much to the fore, just 13% considered it a good time to purchase big ticket items like furniture and electrical goods (down from 31% last month).
Households’ concerns about the COVID-19 pandemic:
Losing own job
Reduction in own working hours
Cut to own pay
General economic slowdown
Paying mortgage or rent
None of these
“With the COVID-19 pandemic upending day-to-day commerce, the four sectoral Pulses nosedived in April.”
•Huge drop in Business Pulse in April
•Firms downbeat about business activity and hiring
•One in five expects to cut wages in the coming year
The Business Pulse posted a historic low in April 2020, coming in at 29.6. This was down 38.8 on March and 63.7 lower than a year ago. This month’s readings were weak across the board, with seven in ten firms reporting lower business activity in the recent trading period(led by services and retail). The COVID-19 outbreak and the policy actions being taken at home and overseas to suppress the virus are affecting businesses through a number of channels – demand, supply chains, operations etc. – and mostly negatively, though around three in ten are seeing some new opportunities.
Main channels through which the COVID-19 pandemic is affecting businesses:
Reduced demand from domestic customers
Reduced demand from overseas customers
Supply chain disruptions
General economic slowdown
Seeing new opportunities
“Expectations for house price increases took a battering this month, with buying and especially selling sentiment also softening.”
•Housing Pulse nosedives in April
•25% think it is a good time to sell (down from 61% at the start of the year)
•Three in ten think it is a good time to buy (previously 38%)
The Housing Pulse came in at 25.0 in April 2020. This was down 52.4 on last month and marks a fresh low for the series. Expectations for house price gains over the coming year fell sharply this month, and for the first time since sentiment started to be tracked in January 2016, more households now expect prices to decline (55%) than go up (one in seven). The COVID-19 outbreak has imparted a significant shock to the economy and with the government imposing a temporary rent freeze and ban on evictions, households’ expectations for future rent increases also headed into negative territory.
The Bank of Ireland Regional Pulses bring together the views of households and firms around the country. The results for April 2020 (3 month moving average basis) show that sentiment was down on the month in all four regions.
Three month moving averages
• Dublin Pulse = 59.3 -20.7 points on the previous survey;
• Rest of Leinster = 65.5 -15.8;
• Munster = 65.9 -14.5;
• Connacht/Ulster = 64.9 -18.3.
About the Bank of Ireland Economic Pulse:
The Bank of Ireland Economic Pulse survey is conducted in conjunction with the European Commission, with the data feeding into the EU Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, a Europe-wide sentiment study running since the 1960s. The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and approximately 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.