Employment fears dented consumer confidence last month but the fall was expected, according to new data.

The IIB/ESRI survey of consumer sentiment in February saw the index falling to 84.9, from 93.2 in January, wiping out strong gains during the preceding five months and bringing the level of the index to a six-month low.

The drop was the most significant one-month decline since July 2003.

The survey assesses consumer attitudes to their present and future financial condition, as well as their employment prospects.

The survey findings on employment reveal that 59 per cent of Irish consumers expect unemployment to rise in the coming year, up from 41 per cent in January, the most pessimistic reading since February 2004.

IIB chief economist Austin Hughes said job-loss announcements between mid-January and mid-February had affected confidence.

Companies reporting significant job losses between mid-January and mid-February included Pfizer, Alcatel, Thompson Scientific and FCI.

"The range of companies downsizing employment in Ireland of late has fed negative sentiment among consumer, specifically in relation to their own job security as well as more generally in regard to prospects for the economy as a whole," Mr Hughes said yesterday.

The survey finds higher turnover in the jobs market, caused by structural change in the workplace, is making consumers more sensitive to news of company closures.

While SSIAs and tax reductions are expected to support consumer confidence in the coming year, Mr Hughes expressed concern that fear of job-loss would continue to impact on sentiment.

"While we reckon that the employment picture is a good deal healthier than consumer sentiment might suggest, there is little doubt that worries about job-loss will continue to dampen sentiment and spending in coming months."

He said the latest survey suggested the Government had been proven right in introducing a "generous" budget.