Irish business sentiment dips as rising costs bite

Households more cautious about spending and general activity, survey shows

Bank of Ireland’s latest monthly economic pulse index reading for business sentiment dipped by 0.7 points to 90.1 in September. Photograph: Sasko Lazarov/RollingNews.ie

Bank of Ireland’s latest monthly economic pulse index reading for business sentiment dipped by 0.7 points to 90.1 in September. Photograph: Sasko Lazarov/RollingNews.ie

Your Web Browser may be out of date. If you are using Internet Explorer 9, 10 or 11 our Audio player will not work properly.
For a better experience use Google Chrome, Firefox or Microsoft Edge.

 

Business confidence slipped in the Republic in September as companies grappled with rising raw-material and other costs, according to a survey, amid widespread inflation globally as economies continue to emerge from the Covid-19 pandemic.

Bank of Ireland’s latest monthly economic pulse index reading for business sentiment, based on a survey of 1,350 firms, dipped by 0.7 points to 90.1 in September, the bank said.

While the index was up almost 22 points from a year ago, it said sentiment was “mixed” across various sectors. “On the costs front, two-thirds of firms reported an increase in input costs excluding labour over the past three months, while almost half indicated that they expect to raise their selling prices in the period ahead,” it said.

The consumer pulse, following a survey of 1,000 households, reading stood at 81 in September, unchanged from August, but 28.2 points higher than September 2020.

Caution

The survey found that while households were more upbeat on their current economic situation, as Covid-19 restrictions continued to ease in recent months, they were more cautious about their outlook for general activity and their own pockets. This may reflect some wariness in the run-up to Budget 2022 and the phasing out of pandemic-related supports, the bank said.

“The start of September saw restrictions on organised indoor and outdoor events eased but with the large reopening gains in the rear-view mirror, economic sentiment continued to level off,” said Loretta O’Sullivan, chief economist at Bank of Ireland.

“When businesses were asked to identify the priority area for investment, 37 per cent said housing and 23 per cent said telecommunications,” she said, noting that telecommunications had topped the list during the lockdown periods.

Some 83 per cent of households said they expected house prices to continue to increase. The latest official figures from the Central Statistics Office show that Irish residential prices rose at an annual rate of 8.6 per cent in July, up from 6.9 per cent in June.