Consumers are stalling on big purchases such as furniture or electrical goods because of concerns about the economy, a study published on Monday shows.
Bank of Ireland’s Pulse Survey, which measures consumer and business sentiment, indicates that both groups were cautious about the economic climate in February.
The trend was most pronounced among consumers, who were downbeat about their finances and concerned at global developments such as Brexit and Donald Trump’s accession to the US presidency.
The survey says only one in three consumers would consider this a good time to buy items such as furniture or electrical equipment, compared with 44 per cent last month.
“Consumers sounded a note of caution in February as seasonal effects wore off and concerns about Brexit and Trump took over,” said the bank’s chief economist, Dr Loretta O’Sullivan.
The survey shows that three in five people are worried about being able to provide for a comfortable retirement, and this topped the list of reasons for putting money aside, along with holding something back for a rainy day.
Most households have a deposit or savings account along with personal and workplace pension schemes, the survey says. Some consumers have other investments such as bonds, shares or property other their home.
Slowdown
Businesses were generally more positive about immediate prospects, but different sectors gave different feedback. Signs of a slowdown in future work weighed on builders, but industry and services companies were positive about the near term and indicated plans to hire more workers.
Uncertainty related to both Brexit and Mr Trump also featured among businesses’ concerns.
Most companies do not expect to change their selling prices in the near future, but are seeing their costs rise, the survey says.
“While the weak pound is expected to push down on import prices, the uptick in oil prices in recent months is working in the opposite direction, with 40 per cent of firms reporting an increase in input costs over the past three months,” Dr O’Sullivan said.
The survey also shows that the rent caps introduced by the Oireachtas for areas with accommodation bottlenecks such as Cork and Dublin are likely to have an impact.
According to Dr O’Sullivan, the percentage of respondents expecting rent increases of more than 5 per cent fell to 32 per cent this month from 44 per cent last November.
The overall Pulse Index stood at 92.6 this month, 0.6 less than in January and 4.4 behind where it was this time last year, indicating an overall dip in sentiment.
The survey is based on questions given to 1,000 households, 500 industrial companies, 800 services firms, 500 retailers and 250 builders. The bank summarises the answers as a balance, which is the difference between positive and negative responses. It calculates the index by combining the balances. Its original value was set at 100 in January 2016 when the bank began the index.
