UK pulse: business sentiment rises but Covid-19 concerns persist

Monday 25 May 2020 09:39 CET | News

The Bank of Ireland Economic Pulse has come in at 44.0 in May 2020, recovering a little from the lowest recorded reading in its history in April 2020.

The index, which combines the results of the Consumer and Business Pulses was up 9.6 on April 2020 but still 46.3 lower than in 2019. Households and businesses were on edge again in May 2020 as the country remained in lockdown, but with some improvement on the public health front and the Government setting out a roadmap for re-opening the economy, expectations of both consumers and businesses were less negative than in April 2020.

This contributed to a stabilisation in the Consumer Pulse and helped lift the Business Pulse. The Business Pulse recovered some ground in May 2020, coming in at 41.5. This was up 11.9 on April’s all-time low but down 49.1 in 2019. The May survey also finds that non-labour input cost pressures have softened over the past three months, and points to downward pressure on selling prices in the period ahead amid generally muted consumer demand.  

The Consumer Pulse stood at 53.9 in May 2020, up 0.7 on last month’s all-time low but down 34.9 from 2019. Households lowered their assessment of the current economic situation again this month and with the COVID-19 shock impacting incomes, jobs and restricting travel, seven in ten people indicated that they expect to spend less on holidays in 2020 compared with 2019.

Households were also downbeat about the outlook for the economy, albeit less so than in April 2020, likely reflecting the announcement of a phased easing of the public health restrictions over the summer.

At 25.3 in May 2020, the Housing Pulse was flat on the month. With almost three in five households expecting house prices to fall over 2021 but just one in six expecting them to rise, the balance of responses remained deep in the red this month. While a pullback in the demand for housing is to be expected as the economy slows, the COVID-19 shock will also affect the supply of new homes.

Indeed, nine in ten housebuilders reported a drop-in business activity over the past three months as heightened uncertainty, material and equipment shortages and widespread site closures hampered output.

The Bank of Ireland Regional Pulses brings together the views of households and firms around the country. The results for May 2020 (3 months moving average basis) show that sentiment was down on the month across the board.

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Keywords: Bank of Ireland, Economic Pulse, study, economy, house prices, consumers, businesses, UK, Ireland, COVID-19
Categories: Banking & Fintech
Countries: United Kingdom
This article is part of category

Banking & Fintech