In this week’s public policy bulletin, we take a look at the latest economic update from the Parliamentary Budget Office as well as examining recent trends in the private rental sector as reported to the Joint Oireachtas Committee on Housing by the RTB this week. In addition, we review the Quarter 2 earnings and labour cost statistics from the CSO as well as assessing current levels of consumer confidence in Northern Ireland as set Danske Bank’s latest Consumer Confidence Index.
Parliamentary Budget Office issued economic update post-Budget
This week the Parliamentary Budget Office (PBO) issued its latest economic update providing an overview of recent economic trends seen in the Irish economy following the introduction of Budget 2023. Noting how inflation is currently at record levels with wages and retail sales falling in real terms (i.e. by adjusting for inflation), these factors “will act as a drag on the economy in 2023” despite the overall economic growth seen in 2022.
Indeed, while noting that the economy is currently performing well, the PBO signalled that “clouds are on the horizon” as inflation, which was initially driven by high energy prices but now has spilled over to other items, continues to grow unabated. According to the report, 76 percent of the items in the CPI basket are now experiencing more than 2 percent inflation.
Joint Oireachtas Committee on Housing examines recent trends in the private rental sector with Residential Tenancies Board
On Tuesday members of the Joint Oireachtas Committee on Housing met with representatives from the Residential Tenancies Board (RTB) to discuss the findings of the RTB’s 2022 rental survey. While the results of the survey are yet to be published, RTB chairperson Tom Dunne nonetheless shared some interesting preliminary results arising from the survey.
The 2022 results show that most small landlords (94 percent) are part time landlords that do not manage properties as their primary occupation with a quarter of small landlords surveyed stating that they are either likely or very likely to sell their rental properties in the next five years. In addition, the survey also found that many property owners, tenants, and agents alike found the regulatory framework and changing legislation around rental properties increasingly difficult to navigate and understand.
Central Statistics Office issues Quarter 2 earnings and labour costs
The Central Statistics Office (CSO) this week issued its Earnings and Labour Costs results in respect of quarters 2 and 3 2022. Preliminary estimates for Q3 2022 show average weekly earnings in the Republic were €864.32, an increase of 3.2 percent compared with €837.61 in Q3 2021. Meanwhile, average weekly earnings rose by 12.4 percent over three years from €769.14 in Q3 2019 (pre-COVID-19) to €864.32 in Q3 2022.
Average hourly other labour costs increased by 60.7 percent across all economic sectors to €4.13 from €2.57 in Q3 2021. A significant factor in this increase was the ending of the Employment Wage Subsidy Scheme (EWSS) on 31 May 2022, explained Louise Egan, Statistician in the CSO’s Earnings Analysis Division.
According to the results, the sectors with the highest average hourly total labour costs were the Information & Communication sector (€49.51 per hour) followed by the Education sector (€43.24 per hour). Notably, the sectors with the highest job vacancy rate in Q3 2022 were Professional, Scientific & Technical Activities (3.8 percent), followed by the Financial, Insurance & Real Estate Activities (2.8 percent).
Consumer confidence decreases in Northern Ireland
According to a report issued this week by Danske Bank, consumer confidence in Northern Ireland decreased again in the third quarter of 2022 as higher prices continued to squeeze household finances. Over half of respondents (56 percent) believed their finances had deteriorated over the last year with 63 percent of respondents expecting their financial position to worsen over the next year reflecting a dampened optimism amongst consumers.
In terms of the factors influencing these sentiments, 47 percent of those surveyed identified the overall impact of higher prices on their household incomes as being the most influential. By contrast, 13 percent of people pointed to global risks (such as the ongoing war in Ukraine) as impacting their sentiment while 11 percent of respondents highlighted concerns around post-Brexit trading arrangements as having the most bearing.