Consumer and business confidence dropped this month, amid rising Covid cases and Brexit setbacks.
That is according to the latest Bank of Ireland Economic Pulse, which has fallen to its lowest reading in eight months.
The survey gathers the views of households and businesses on topics such as finances, spending plans, house prices and business activity.
“There was a step down in the Economic Pulse this month, with both the consumer and the business mood souring,” said Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland.
The Economic pulse, which combines the results of the Consumer and Business Pulses stood at 83.2 in November.
This was down 4.4 on last month but up 16.2 on a year ago.
The Consumer Pulse was lower for a second month in a row.
At 75.2, the index was 1.9 lower than in October but 14.9 higher than a year ago.
With Covid-19 cases rising and UK-EU tensions elevated, the survey shows that households were more downbeat about the economy’s prospects this month.
However, there was little change in their assessment of their own financial situation compared to the previous month.
As for Christmas shopping, 75% said they intend to spend the same or more on presents compared with last year.
This is up from three in five in 2020, and back in line with the pre-pandemic figure.
“Some sprinkles of festive cheer were evident in the survey results but not enough to offset Covid concerns and Brexit blues,” said Dr O’Sullivan.
The Business Pulse came in at 85.2 in November 2021, down 5.1 on last month but 16.6 higher than a year ago
All four of the business sectors posted lower readings in November – industry, services, retail and construction.
“Not only is uncertainty increasing again but pandemic and Brexit-related bottlenecks are biting,” said Dr O’Sullivan.
“These are having spill-over effects, with three in four firms reporting increases in non-labour input costs and over half saying that they are likely to hike their selling prices,” she added.
The research shows that services firms were gloomier about near-term prospects for business activity.
While four in five retailers expect their Christmas turnover to be the same or higher than last year, this is a little lower than normal as the sector contends with stock shortages.
The report confirms that supply chain disruption is causing problems for builders and firms in industry too, with knock-on impacts for input costs and selling prices.
This month’s research also took a look at businesses’ investment plans.
The data show that almost 30% expect to increase spending in 2022 compared with this year, spurred on by strong demand from customers and supportive financial conditions and other factors.
Meanwhile, the Housing Pulse came in at 116.5 in November 2021, down 2.3 on last month’s reading but 44.8 higher than a year ago.
While four in five households still think house prices will rise over the coming year, the share expecting them to go up by more than 5% eased to 40% in November, from 43% in October.
The rents picture was similar, with expectations for rent increases in excess of 5% also ticking down, perhaps in anticipation of the new cap that is being legislated for.