Initial Covid-19 impact on commerce the tip of the iceberg
Economic Pulse shows the services sector witnessed the steepest drop in sentiment
The boarded-up Monsoon clothes and accessories store on Dublin’s Grafton Street. Photograph: Bryan O Brien
An index tracking business and consumer sentiment plunged to a historic low earlier this month and the fall is likely just the “tip of the iceberg” compared to what is in store in coming months.
The Bank of Ireland Economic Pulse index in March recorded its lowest score since it was set up four years ago, as the full scale of the potential economic impact of Covid-19 registered with consumers and businesses. The sharp decline even surpassed the dip seen in the immediate aftermath of the 2016 Brexit vote.
“As the March surveys were largely conducted before the Government announced the closure of schools and other restrictions impacting normal everyday and economic activities, both will likely be dealt another blow next month,” said the report’s authors.
The bank’s chief economist Loretta O’Sullivan, added: “The school closures and other restrictions that have been put in place to contain the spread of the virus mean that this month’s weak prints are likely only the tip of the iceberg.”
The Economic Pulse separately measures business and consumer sentiment. The March results saw steep drops in business sentiment across the board, except for in the industrials sector, which held firm. The services sector witnessed the steepest drop in sentiment.
“With the public health pandemic starting to disrupt economic life, firms in all sectors reported some softness in the recent trading period and significantly marked down their expectations for business activity over the coming three months,” said the report.
The falls recorded in consumer side of the index showed that “households’ worries about the economy were back with a bang this month”.
“Buying sentiment dipped this month too, with just over three in 10 considering it a good time to purchase big ticket items compared with 35 per cent in February,” said the report’s authors.