Economic sentiment weakened across the euro area in August, but the Republic bucked the trend and displayed a marked improvement in confidence.

The results of the latest Business and Consumer Survey carried out by the European Commission showed that, after dipping to 94.1 in July, the economic sentiment index for the Republic returned to the June level of 99.9.

The survey is seen as a volatile measure, however. It came just a day after a comparable study by the Economic and Social Research Institute and IIB Bank showed that Irish consumer confidence hit a four-year low in August. The commission's research contradicted this, saying consumer confidence picked up in August and is now in line with long-term average EU levels.

The commission also pointed to a dramatic turnaround in construction-related confidence, which, although still below average, improved considerably from July.

Across the euro zone as a whole, economic confidence fell for the third consecutive month, led by declines in the service sector, construction and among consumers, according to the commission survey. Analysts believe that this, when combined with data showing inflation is under control, could help persuade the governing council of European Central Bank to leave interest rates unchanged when it meets next Thursday.