Savings and Investment Index hits highest level since launch

September 10, 2018

News
Bank of Ireland/ESRI Savings and Investment Index
Macroeconomics
See Publication

‘Consumers starting to think of Christmas saving instead of summer spending’

  • Greater satisfaction around amounts saved powers saving sentiment to 4½ year high
  • Almost 3/4 of people satisfied with the amounts they were investing in August
  • One in three felt it was a good time to invest in August, a four month high

The Bank of Ireland/ESRI Savings and Investment Index, which measures Irish peoples’ sentiment towards saving and investment rose to 106 in August 2018, the highest level since October 2017.  Much stronger attitudes to both saving and investment were the key driver behind the big jump in the headline index.

Savings Index

The monthly Savings Index increased to 105 in August from 102 in July – this marked the highest reading for the Savings Index since February 2014. The large increase was fuelled by a big improvement in the Savings Attitude sub-index which rose from 103 to 112. Overall savings patterns remained strong in August with 49% of people answering that they were regular savers. However savers appeared happier with the amounts they were putting away each month – 51% felt they were saving the right amount in August, the strongest response to this question since April 2017.

The improvement in savings attitudes may to some extent reflect seasonal factors as people look to build saving buffers ahead of Christmas. Broader savings patterns (both regular and occasional saving) also picked up in August in the Border-Midwest region which could indicate extra precautionary saving as Brexit uncertainties rumble on.

The one negative in August’s data was that people still appear uncertain about the outlook for the savings environment. 40% of people felt it was a good time to save in August, down marginally from 41% in July. Older savers in particular were less optimistic on the savings outlook with 34% of over 50s saying it was a good time to save, down from 41% in July. Together this uncertainty pulled the Savings Environment sub-index down to 98 from 100 in July.

Investments Index

Like its savings counterpart, the Investment Index enjoyed a significant move in August, rising from 97 to 106, marking its highest level since launch. As with the Savings Index, much stronger attitudes to investing were the key driver of the gain. The percentage of people that felt they invested the appropriate amount spiked to 73% in August, a massive increase on the 54% response in July. One in three (32%) were also investing regularly in August, unchanged compared to July. Both of these contributed to the Investment Attitude sub-index rising to 110 compared to 97 in July.

The Investment Environment Index also posted a solid gain in August, rising to 101 from 98. The percentage of people that felt it was a good time to invest rose to a four month high of 34%, probably helped by another good month for returns with world stock markets up 1.4% for Irish investors.

Commenting on the August results for the Bank of Ireland/ESRI Savings and Investment Index, Tom McCabe, Bank of Ireland Investment Markets said “August’s results for the Bank of Ireland/ESRI Savings and Investment Index clearly illustrate that Irish savers are in a good place. Over the past year a strong Irish economy has provided a fertile environment for saving. Seasonal trends with consumers starting to think of Christmas saving instead of summer spending combined with ongoing Brexit uncertainties probably bolstered the saving trend in August.

“It is also encouraging to see the mood of Irish investors improve at the same time, particularly given continuing concerns around global trade and geopolitics in particular. Taken together the August results suggest that despite possible economic risks, Irish savers and investors are quietly confident about the global outlook.”

Additional €10k

August’s responses for our risk barometer question saw little change compared to June. When asked how people would use a windfall gain of €10,000, 66% of people said they would prefer to save it with 34% preferring to invest it, little changed from the June responses of 62% and 38%. The results continue to indicate Irish peoples’ preference for saving over investment, even when it comes to once off windfall sums.