Business sentiment at lowest level of year after Trump election

Irish consumer and business sentiment has dropped to its lowest level of the year following the election of Donald Trump to the US presidency, according to Bank of Ireland.

The bank’s “economic pulse” stood at 85.8 in November, its lowest reading this year. The index, which combines the results of the bank’s consumer and business pulses, was down 8.6 on October.

The data shows a broad based softening in sentiment, with both the consumer and business pulses losing ground.

Households were more downbeat about the economy and their own financial prospects, while firms in all sectors pared back their expectations for near-term business activity.

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This index also examined firms’ investment intentions, with the results showing that two in five expect to increase their spending on investment in 2017 compared to this year, with half planning to spend the same amount.

Bank of Ireland chief economist Dr Loretta O’Sullivan said Mr Trump’s election following closely after the UK’s decision to leave the EU “looks to have unsettled consumers and firms”.

“External headwinds were to the fore this month, dampening business sentiment and weighing on investment plans,” she said. “But with customer demand and other factors providing support, two in five expect to increase their investment spend in 2017.”

Streamline production

This month’s figures also show that around half of all businesses intend to focus on replacing and maintaining plant and equipment. Firms are furthermore looking to extend and streamline production capacity.

Dr O’Sullivan said that with domestic activity expanding and other factors providing support, “some firms are seeing opportunities” and this is reflected in their investment plans.

The consumer pulse fell for a second month running in November, coming in at 88.3, down 4.6 on last month’s reading and a new low for 2016.

With the external backdrop unsettled and some industrial unrest at home, households downgraded their assessment of the economy and their own financial prospects, and also scaled back expectations for further falls in unemployment.

Even so, the figures show three in four plan to spend the same or more on Christmas presents this year compared to last, while 36 per cent of retailers expect turnover to increase.