One third of households ‘just making ends meet’
Consumer sentiment dropped in June, while the mood among businesses was mixed, according to the latest Economic Pulse report from Bank of Ireland.
As cost of living pressures intensify, the survey reveals that one third of households now say they are ‘just making ends meet’, up from a quarter at the start of the year.
The findings paint a mixed picture for businesses, with sentiment improving in the industry, retail and construction sectors, and dropping in the services sector.
For June, the index, which combines the results of the Consumer and Business pulses, came in at 78.8, down 3.9 on last month and 11 lower than a year ago.
“Global markets have been volatile lately as energy sanctions on Russia have been broadened and as the major central banks up the ante in their fight against inflation,” said Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland.
“Irish households have been jumpy too, with the Consumer Pulse backpedalling in June after rallying in May,” she added.
The Consumer Pulse stood at 51.3 this month, down 4.1 on May and 24.8 lower than a year ago, suggesting that households are gloomier about the economy.
The series posted its joint second lowest reading this month.
Meanwhile, the Business Pulse stood at 85.6 in June, 3.9 lower than in May and 7.5 lower than a year ago.
“June saw the Business Pulse dip below its pre-pandemic level for the first time this year,” Dr O’Sullivan said.
The industry, retail and construction pulses rose this month but a drop in the services pulse – after a solid five-month run of gains – pulled the overall index down.
The report reveals that the backdrop for firms in general remains challenging, with three in five finding it difficult to predict the future development of their business situation at present.
On the costs and pricing fronts, the share reporting an increase in non-labour input costs over the past three months was stable in June, although still elevated at 87%.
The share expecting to up their selling prices in the near term eased for a second month running to 62%.
The Housing Pulse also lost ground for a second consecutive month in June.
At 110.7, the index was 4.9 lower than last month and down 5.6 on a year ago.
With the European Central Bank announcing that it will raise interest rates in July and again in September – by 0.25 percentage points in the first instance and at least that much in the second – the report suggests that households were more circumspect about prospects for house prices this month.
While 74% still expect growth over the coming year, this was down from 79% in May, with Dublin and Connacht/Ulster leading the move lower.
“Looming interest rate hikes mean higher mortgage bills for some households and contributed to some slippage in the Housing Pulse this month,” said Dr O’Sullivan.
“But with supply continuing to lag demand, three in four expect house prices to increase over the coming year,” she added.
The Bank of Ireland Regional Pulses bring together the views of households and firms around the country.
The indices are calculated on a three-month moving average basis and show that sentiment was down in Dublin and Munster, more or less flat in the Rest of Leinster and up in Connacht/Ulster in the April to June period compared with the March to May period.
Article Source – One third of households ‘just making ends meet’ – Gill Stedman – RTE