Irish consumer sentiment improved in October for the third month in a row, although expectations of a rise in unemployment also climbed.

The IIB consumer sentiment index climbed to 69.4 from 68 in September, a 13-month high. This suggests growing optimism over the economy's prospects, said Mr Austin Hughes, IIB chief economist.

Although a majority of the public questioned still expect unemployment to rise, job worries have eased markedly since the last survey.

However, few respondents envisage a dramatic improvement in their personal finances. Expectations of a rise in mortgage rates over coming months may be a factor, said Mr Hughes.

He said: "Consumers probably realise that the pace of wage increase is likely to soften in the coming year and a likely further rise in public sector charges will also crimp spending power."

Such caution is probably not unwise, despite growing buoyancy over the state of the economy, said Mr Hughes.

"If Irish consumers were to grow too bullish at this point, there might be some risk that the trajectory of household spending would move sharply out of step with income prospects."

In this light, a substantial increase in borrowing and spending is not likely, said Mr Hughes.

The boost in Irish consumer sentiment mirrors that of the United States, which climbed 1.3 points to 89 in October.

The release of new live register figures later this week, may have a strong bearing on consumer sentiment this month, said Mr Hughes.

"To the extent that Irish consumers are less fearful about the risk of job loss, prospects for spending should improve," he said.