The mood of Irish consumers improved during October, according to a survey published today.
The KBC Ireland/ESRI Consumer Sentiment Index rose to 54.2 from 49.6 in September to reach its highest level since April 2008. The corresponding figure for October 2008 was 42.0.
Commenting on the "surprisingly strong increase" in sentiment, KBC said this should be treated with caution and said although the global upturn has helped, it does not entirely explain the better mood.
Falling prices, low borrowing costs, the National Asset Management Agency and less pessimistic forecasts for Irish economy may all have helped, according to KBC, which noted that consumers remain cautious and warned of possible correction in the November data.
The underlying trend, carried by a three-monthly moving average, rose a smaller amount, from 49.3 to 50.8. "However, this data also suggests "a clear albeit more modest" improvement in consumer sentiment in recent months, KBC said.
Commenting, David Duffy of the ESRI said: “Once again the rise in consumer sentiment is mainly due to improved consumer expectations. . . . Although there has been an improvement in sentiment consumers continue to be cautious. Three out of four consumers remained concerned about the outlook for the labour market.
Austin Hughes of KBC Ireland said the findings hinted that Irish consumers may believe the economy has reached a turning point. "They expect conditions to remain tough for some time to come, but there is a sense that the absolute worst may be behind us," he said.
The Consumer Sentiment Index comprises two sub-indices; an index of consumer expectation that focuses on how consumers see prospects over the next 12 months and an index of current economic conditions, focusing on the current situation.
The Index of Consumers Expectations is based on consumers’ perceptions of their future financial situation, the economic outlook and employment expectations. The index value for October stood at 40.4 compared with 34.4 in September.
Consumers’ perception of their current situation improved in October. The value for this particular index was 74.7, compared with 72.3 in September.
KBC said the rise in Irish consumer sentiment last month had to be seen in the context of mixed results from similar data for other economies.
There was a sharp rise in the GFK measure of UK consumer confidence, for example, while consumer sentiment across the Euro zone posted only a marginal gain. However, most of the main indicators of confidence for the United States showed declines last month
