Business confidence jumped in April to higher levels than seen even before the Covid-19 pandemic, as they eye the rollout of vaccines and some easing of restrictions, according to Bank of Ireland.
The latest Bank of Ireland business pulse index rose by 14.3 points from March to 88.9 for the current month, according to a survey of about 2,000 companies. The reading was up 59.3 points on April 2020.
“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,” the bank said.
“Some 53 per cent 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 10 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.”
The bank’s consumer pulse, tracking 1,000 households, rose for a third straight month in April, 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 per cent - from 61 per cent during the first lockdown.”
Economy to grow by 5%
Separately, EY said that it expect the Republic’s economy to grow by 5 per cent this year and for the labour market to recover to its 2019 levels by late 2023.
"Ireland exits this economic crisis in much stronger shape than it did the last one. Though the domestic economy has been hit very hard, the Government has been able to borrow to support firms and individuals and the prospect is for a very strong domestic surge later in 2021," said Neil Gibson, chief economist for EY Ireland.
“Hopefully, this will be sufficiently strong to allow Government to ease back support and hand-on the spending baton to the consumer.”
EY estimates that an additional €11 billion will have been accumulated in domestic deposit accounts over the course of the pandemic to the middle of 2021, over and above what may have been expected in the absence of any Covid-19 disruption.