Bank of Ireland : Business confidence soars in April

Business confidence soars in April

Bank of Ireland Economic Pulse close to pre-pandemic level

• Business sentiment now higher than before the pandemic
• More than one in two firms anticipating a near-term pick-up in business activity
• Almost a quarter expect to employ more people

The Bank of Ireland Economic Pulse came in at in 85.4 in April 2021. The index, which combines the results of the Consumer and Business Pulses, was 11.8 higher than in March and up 51.1 on last April's all-time low.

With the virus situation stabilising, inoculations going up, some easing of Level 5 restrictions - the return of in-school education and residential construction - and more expected over the coming months, sentiment among households and especially firms rose again this month. As a result, the Economic Pulse is now fast approaching its pre-pandemic level.

Commenting on the April Economic Pulse, Dr Loretta O'Sullivan, Group Chief Economist for Bank of Ireland said: 'The Economic Pulse rose again in April, making it a hat-trick of gains. Both the consumer and business mood brightened this month, helped by the baby steps being taken to restart the economy and society and the expectation of a more widespread re-opening as we head into the summer. But while households were along for the ride, it was firms who were behind the wheel driving the improvement in the headline index in April. Businesses were also pretty upbeat about growth prospects further out, with three in five having ambitions to expand in the next one to three years, which is in line with the pre-COVID figure.'

Business Pulse

'The Business Pulse led the way this month and is now back above its pre-pandemic level.'

• Business Pulse strengthens in April
• Third consecutive gain
• Firms more upbeat about activity and jobs

At 88.9 in April 2021, the Business Pulse was 14.3 higher than last month and up 59.3 on a year ago. The improvement in sentiment was broad based, with all four sectoral Pulses - industry, services, retail and construction - posting higher readings this month amid a modest easing of public health restrictions and the expectation of more to come. Some 53% of firms are anticipating a pick-up in business activity in the near term, while almost a quarter expect to employ more people. Three in ten also indicated that they are planning on increasing basic pay over the next 12 months, though the majority are set to stay on hold for the time being as they focus on restoring profitability.

• Industry Pulse = 94.4 +11.8 points on the previous survey;
• Services Pulse = 87.8 +14.2;
• Retail Pulse = 87.5 +17.2;
• Construction Pulse = 90.1 +12.7.

Consumer Pulse

'The steps being taken to restart the economy and society helped lift the household mood in April.'

• Consumer Pulse up in April
• Almost half think unemployment will fall
• Buying sentiment improves

The Consumer Pulse rose for a third month running in April 2021 to 71.7. This was 1.9 higher than last month's reading and up 18.5 on a year ago. Households were more positive about the economy and their own finances this month, with the share saying that they are holding out on spending easing to 42% (from 61% during the first lockdown) and the share considering it a good time purchase big ticket items like furniture and electrical goods ticking up to 28%.

Housing Pulse

'Even with house prices on the rise, seven in ten think it is cheaper to buy than rent in their area.'

• Housing Pulse increases in April
• 73% expect prices to go up in the next year
• Buying continues to trump renting

The Housing Pulse stood at 107.9 in April 2021, up 10.6 on March and 82.9 higher than last April's trough. Households in all regions raised their expectations for future house price gains this month, taking the index to its highest level since the autumn of 2018. The survey also finds that 36% plan to spend a large sum on home improvements over the coming year, a series high that likely reflects a combination of increased savings and the view that remote or hybrid working will be a feature of the post-COVID landscape for some.

Regional Pulse

The Bank of Ireland Regional Pulses bring together the views of households and firms around the country. The results for April 2021 (3 month moving average basis) show that sentiment was up on the month across the board.

Three month moving averages:

• Dublin Pulse = 76.0 +8.5 points on the previous survey;
• Rest of Leinster = 73.8 +5.3;
• Munster = 75.4 +8.2;
• Connacht/Ulster = 79.5 +11.5.