A new survey shows that while households remain very gloomy about the economic situation, they were a little less pessimistic about prospects for the coming year as Covid-19 restrictions begin to be lifted.
47% of firms also believe activity will increase in next three months, the latest Bank of Ireland Economic Pulse survey reveals.
The Bank of Ireland Economic Pulse showed a reading of 56.3 for June.
The index, which combines the results of the Consumer and Business Pulses, was up 12.4 on last month but 34.4 lower than a year ago.
Dr Loretta O'Sullivan, group chief economist at Bank of Ireland, said the June data confirms that a rebound in sentiment is underway, following on from the improvement seen in May, with consumer and business confidence both rising this month.
But she cautioned that it was still early days and so far the Economic Pulse has only recouped just under half the losses it sustained in the wake of the Covid-19 outbreak.
"This isn't too surprising given the unprecedented scale of the recent shock triggered by the public health emergency. But as the economy springs back to life and re-boots over the coming weeks and months, with more shop front shutters being raised and more people returning to work, sentiment should continue to strengthen," she added.
Today's Consumer Pulse survey showed that financial worries and concerns about job security eased in June as some people returned to work, while buying sentiment improved another notch.
21% of consumers said they considered it a good time to make major purchases, compared with 16% in May and a low of 13% in April.
Bank of Ireland said the Business Pulse rose for a second month in row in June. At 55.9, the index was up 14.4 on May's reading but down 34.9 the same time last year.
The jump was broad based, with the industry, services, retail and construction pulses all rising this month.
Sentiment was low in respect of business activity over the past while, but with the economy beginning to re-open and the Government accelerating the timetable for easing the Covid-19 restrictions, expectations for business activity and hiring intentions for the period ahead were revised up.
Ireland's main trading partners are now also coming out of lockdown and firms in the industry and services sectors reported some improvement in export order books in June, Bank of Ireland said.
Meanwhile, the Housing Pulse recovered some ground in June 2020, coming in at 32.9. This was 7.6 higher than last month but 66.5 lower than a year ago.
The share of households expecting house prices to fall in the next 12 months stood at just over half in June - down from almost three in five in May.
But only one in six are anticipating price gains and so the balance of responses remained in firm negative territory.
Expectations for future rent increases were also in the red this month, Bank of Ireland said.
