Companies and households are both feeling less confident about their finances this month than they were in August, according to the latest monthly Bank of Ireland Economic Pulse Survey.
Dr Loretta O'Sullivan, group chief economist with Bank of Ireland, said that consumer sentiment lost a bit of steam this month after a very strong August. She said there may have been a little bit of "overshooting" last month which resulted in a correction this month. There is some nervousness in the run up to next month's Budget, which is having an impact on the business side. Over the last few months activity has become somewhat subuded and that was eveident again in September with the lack of clarity and progress on Brexit hitting business sentiment.
The Bank of Ireland Economic Pulse contains a Regional Pulse and companies in the different regions were asked how Brexit would impact them. Dr O'Sullivan said that while companies in Connacht/Ulster were the most negative about the impact of Brexit, the majority of companies across the regions were also expecting a negative impact. Businesses for also asked about their assessment of housing infrastructure in their regions. Unsurprisingly they were not very complimentary and Dr O'Sullivan said that half of firms in Dublin and the rest of Leinster and Munster saw housing as an issue and called it out as their biggest need for investment.
However, companies were reasonably happy with the country's basic infrastructure - water, energy, waste. But there was more of a difference when it came to transport and communication with one out of two firms in Ulster/Connacht rating the existing infrastructure as inadequate, double the one in four figures for Dublin and the Rest of Leinster. Telecommunications also scored particularly poorly in Connacht/Ulster, with half considering it to be inadequate. This compares with just a third of businesses in the rest of Leinster and Munster, whereas the bulk of Dublin businesses rate it as adequate or above.
Overall, the Bank of Ireland Economic Pulse came in at 88.7 in September, the weakest since last November after the outcome of the US election, which followed on from the Brexit vote earlier that year which rattled households and companies. Dr O'Sullivan said that while we have been seeing some upward trends for consumers - apart from this month's blip - some softening on the business side has been evident for the last few months.
On the October Budget, the economist said that the Government will have to operate under the fiscal rules and so there are certain constraints as to what can be done. But households and businesses can still see that the economy is still growing and is still creating jobs - despite the nervousness about the Budget and Brexit, she added.
MORNING BRIEFS - Baked good group Aryzta reported a net loss of €908m for the year to the end of July.
Annual results released to the stock exchange this morning for the year to the end of July show revenue fell by just over 2% to €3.8 billion. The company has been dogged by poor performance in the US and shareholder unease about an investment in frozen food chain Picard which led to the departure of former chief executive Owen Killian and three other members of the senior management team. Aryzta has taken a non-cash charge of €860m for the year. Most of this relates to the write-down in value of its North American business where profit has nose-dived.
*** Japanese Prime Minister Shinzo Abe has ordered his cabinet to compile new economic stimulus measures in a package worth around 2 trillion yen - just under €15 billion - by the end of the year.