The latest Bank of Ireland Economic Pulse reading for October is flat on last month at 92.6, although it is 2.1 higher than this time last year. 

The Irish survey, which provides data for the EU Commission, combines the results of the Consumer and Business pulses. 

The October survey found that growth ambitions remain positive amongst Irish businesses, with almost two thirds of firms looking to scale up their business in the next one to three years.

There were more near term concerns however, across the retail and construction sectors in particular. Both sectors cited uncertainty as a factor which is limiting their activity. This is also evident in consumer sentiment, with a significant drop of 5.8 in the Consumer Pulse as Brexit concerns weigh on households.

Commenting on Bank of Ireland's October Economic Pulse research, Dr Loretta O'Sullivan, Group Chief Economist for Bank of Ireland said the survey took place during Budget 2019. She said that since income tax reductions and social welfare increases were fairly modest, households' reaction was muted. She said there may be more of a bounce when the measures take effect. 

"It was really Brexit that hit home for households this month and with a deal  proving elusive and political rhetoric high, consumer confidence was significantly down on last month," Dr O'Sullivan said.

"While business sentiment was a touch firmer this month, it remains off the two year high it registered mid-way through 2018. The mood was mixed across the sectors with the Industry and Services Pulses rising but the Retail and Construction Pulses falling."

The Business Pulse was fairly steady, up 1.3 on September's reading to 93.1 in October. 

The Construction and Retail Pulses were down on the month, however, with a large number of retailers and builders indicating that uncertainty is limiting their activity. The October survey finds that growth ambitions remain positive across the board, though, with almost two thirds of firms looking to expand their business in the next one to three years. It also shows that 44% are planning on increasing employees' basic pay over the coming 12 months, by 3.8% on average.  

The Business Pulse also includes a question on capacity utilisation, data which hasn't been available in Ireland for a number of years but which the Economic Pulse has begun collecting. This shows that industrial firms are using around 76% of the resources available to them - in line with the historical average. Taken together with other indicators like the low unemployment rate this suggests the economy is reaching  full capacity. Typically it is at this point that wage and price pressures build, pointing to the need for careful management of the economy and the public finances to mitigate the risk of overheating.

There was a sharp drop in the Consumer Pulse in October, coming in at 90.7. This is down 5.8 from last month and is the lowest posting in 20 months. As Budget 2019 announced only slight reductions in income tax and modest social welfare increases, households' assessment of their own finances was little changed, though there may be more of a reaction when the measures take effect. With time running out and no breakthrough in the Brexit negotiations, households were more downbeat about the general economic situation and the outlook for unemployment this month.