Consumer confidence has improved markedly for the second month in a row, although a majority are still pessimistic, according to the results of the Pulse survey.

The latest monthly Irish Times/TNS mrbi survey, taken in late September and early this month, shows that 55 per cent of those surveyed expect employment levels and the economy to weaken over the next year, down from 60 per cent in the previous survey and a peak of 70 per cent in August. The numbers of people expecting an improvement in conditions has risen from 11 per cent in the last survey to 14 per cent now, while the percentage expecting conditions to remain the same has risen from 26 per cent to 29 per cent over the same period.

The improvement in the survey appears to reflect the generally more optimistic expectations for international economic growth. Since August, a string of indicators have pointed to a pick-up in the US economy. Meanwhile, confidence indicators for the euro zone have also improved, although there are still limited signs of real economic improvement.

Consumers appear to be cautiously reacting to these trends and some hope that the Irish economy will benefit from the international upturn.

The Pulse survey is conducted each month as part of the TNS mrbi phone survey and provides an up-to-date measure of consumer confidence. Respondents are asked: "Thinking about the year ahead, do you think employment levels and the Irish economy in general are set to improve, weaken or remain the same."

The first survey was taken in late April and early May. Confidence weakened significantly over the summer months as a string of job loss announcements were made, before some pick-up in confidence over the past two months.

The results of the latest survey are similar to the first one in April/May with 55 per cent expecting conditions to worsen in the year ahead.

A key issue now for the economy is whether this increased confidence can feed into higher levels of consumer spending. So far this year, retail sales have been very subdued and the latest figures showed that sales in August were just 0.4 per cent above the same month last year. The next few months will be important in the crucial run up to Christmas.

A revival in spending is essential if economic growth is to accelerate, while it is also a critical factor for the Exchequer. A fall-off in cigarette and alcohol sales in particular has hit revenues this year by depressing excises, although overall VAT receipts have been reasonably firm and stamp duty has been buoyant due to the strength of the housing market.

Looking at a breakdown of the figures, those at work are still slightly more pessimistic, with 59 per cent expecting conditions to worsen and just 10 per cent anticipating an improvement.

There has been a marked improvement among housewives. Some 62 per cent still expect conditions to worsen, although this is down from 74 per cent in the July/August survey.

Other groups - students, retired people and the unemployed - take a more optimistic view, with less than half in each category expecting conditions to worsen. Students remain the most optimistic, with just 43 per cent expecting conditions to worsen and 21 per cent anticipating an improvement. Among retired people, the percentage expecting a disimprovement in the economy has fallen to 47 per cent, down from a high of 69 per cent in the July/August survey.

Among chief income earners the percentage expecting conditions to worsen has fallen to 55 per cent from 62 per cent in the previous survey and a high of 75 per cent in the July/August poll. Of Females, 58 per cent expect conditions to worsen compared with 52 per cent of males.