Consumer confidence fell back sharply last month when the Irish Times TNS mrbi survey showed the first reversal in sentiment in over a year.
The latest figures show that the percentage of people expecting conditions to improve fell to 36 per cent last month from 44 per cent in the previous survey, while the percentage expecting a weakening increased to 19 per cent from 12 per cent.
The consumer confidence survey had been on an upward trend since summer of last year, when at its low point just 7 per cent of respondents expected conditions to improve and 70 per cent anticipated a decline. Confidence has climbed consistently this year, with an increase recorded in each survey except for May, when the reading was steady.
The decline in August is likely to reflect the sharp rise in oil prices, which pushed up petrol costs and raised fears about a softening in economic growth.
Oil prices hit a record high on August 20th, when US crude prices rose to almost $50 (€41) a barrel. Since then they have fallen back, although prices were rising again at the end of last week on fears that the hurricane season in the US could disrupt production. On Friday US crude prices were back close to $45 a barrel.
The trend in oil is likely to remain a key influence in confidence over the coming months and analysts will be closely watching confidence surveys for business and consumers.
The findings from the survey are similar to the reading from the IIB/ESRI survey, which also fell back in August.
The latest Irish Times TNS mrbi survey was taken as part of a telephone survey between July 27th and August 19th. As such, it coincides almost exactly with a period of rapidly rising oil prices.
Respondents were 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 overall results show 36 per cent expecting conditions to improve, 19 per cent anticipating a weakening and 42 per cent thinking they will remain the same. Some 3 per cent fell into the "don't know" category. The previous survey, taken between 29th June and 22nd July, showed 44 per cent expecting an improvement, 12 per cent anticipating a weakening and 41 per cent believing economic conditions would remain the same.
In contrast to last year, it is notable that those expecting an upturn outnumber the pessimists significantly. However the percentage expecting conditions to "remain the same" is still high, indicating that many consumers remain cautious about forecasts that the economy is on the road to recovery. The latest retail sales figures, published last Friday, show that consumer spending remained quite sluggish heading into the summer.
The survey figures show that main earners tend to be more optimistic. Of "chief income earners", 40 per cent expect conditions to improve, down 10 percentage points on the previous month, against 16 per cent anticipating a decline.
Among those defined as "not chief income earner", those expecting an upturn has fallen to 32 per cent from 37 per cent the previous month, with those expecting a weakening rising to 21 per cent from 14 per cent.
Retired people remain the most optimistic, despite a sharp fall in sentiment last month. The percentage of retired people expecting conditions to improve fell from 64 per cent in July to 48 per cent last month, while those anticipating a downturn doubled from 6 per cent to 12 per cent.
There was also a sharp fall in sentiment among the unemployed, where the percentage expecting economic improvement fell from 43 per cent to 28 per cent, with those anticipating a weakening increasing from 16 per cent to 22 per cent. This may reflect reports at the time that higher oil prices could damage job prospects over the next year.
Higher oil prices and reports of a slowdown in US growth are also affecting sentiment in the workplace. Among those defined as "working", the percentage expecting an economic upturn fell from 43 per cent to 34 per cent, while those expecting a decline increased to 19 per cent from 12 per cent. Some 45 per cent expect conditions to remain the same.
There was an upturn in sentiment in August in those defined as "housewives". Sentiment in this sector had been behind the average but last month those expecting an improvement stood at 35 per cent, up from 28 per cent. However, those expecting conditions to weaken also rose to 26 per cent from 21 per cent. Those expecting conditions to "remain the same" fell sharply from 48 per cent to 34 per cent.
