Bank of Ireland's "Economic Pulse" fell to 92.4 in May as consumer sentiment held steady while business sentiment dropped.

The May reading was down 2.7 points on April's reading and 8.9 points lower than this time last year.

At 94.1, the consumer confidence element of the survey was little changed in May, with households slightly more upbeat about their current economic situation, while they remained a bit unsure about their own finances.

However, the buying climate remained positive with about four in ten consumers thinking now was a good time to buy a big ticket items like household goods.

But May saw a drop in business sentiment with the business element of the survey coming in at 92 - down 3.3 on April and a drop of 11 on the same time last year. 

Bank of Ireland said the drop was mainly due to a weaker services sector, which gave up last month's strong gains.

However, sentiment among industrial firms and retailers increased in May, with the construction sector also putting in a good performance especially in terms of hiring plans. 

Bank of Ireland's group chief economist Dr Loretta O'Sullivan said that sterling was an issue for a number of firms this month, as the news flow from the UK and Europe led to some volatility.

On housing, today's survey shows that four in five survey participants expect house prices to increase in the next year while 70% predict that rents will increase.

The housing element of the Economic Pulse came in at 115.3 in May, down on last month's record high up by 11.3 on the same time last year.

"While builders are generally positive about near-term prospects and housing supply is picking up, it is still well shy of demand which is putting pressure on prices," commented Dr O'Sullivan.

"A shortage of labour is a key issue for the sector, with one in three construction firms finding it difficult to get workers," she added.