Economic Tendency Survey October 2023

Home improvement plans at record low

The Economic Tendency Indicator fell 1.3 points in October from 86.0 to 84.7. The retail indicator stood out in an otherwise more negative business sector by jumping 6.1 points.

The business sector now expects inflation at 2.2 per cent in a year’s time, down 0.2 percentage points from when the question was last asked in July. Firms’ inflation expectations have not been as low since summer 2021.

The confidence indicator for the manufacturing industry fell slightly and points to a normal situation. The decrease was due to more firms reporting excessive stocks of finished goods. Employee numbers were reported as having fallen over the past three months for the first time since January 2021.

The confidence indicator for the building and civil engineering industry dropped 2.0 points to 93.5. Homebuilders have become more pessimistic about the market in a year’s time, but not as pessimistic as the record low in January 2023.

The confidence indicator for the retail trade jumped 6.1 points to 90.6, thanks to more positive signals from food retailers about sales over the past three months. In addition, more retailers expect higher sales volumes in the coming months than in September.

The confidence indicator for the service sector fell and shows the most negative sentiment in the business sector. There are still far more firms than normal reporting an increase in selling prices over the past three months. More than half of these firms attribute this to an increase in domestic costs.

The consumer confidence indicator edged up 0.7 points to 70.1 but still shows much weaker sentiment than normal. A record-low proportion of consumers plan home improvements in the coming year, contrasting with an unusually high proportion during the pandemic. Expectations for inflation in a year’s time decreased marginally to 7.0 per cent.