Consumer sentiment at its highest level in seven years

Tuesday 04 March 2014 16.13
The KBC Bank/ESRI consumer sentiment index was at its highest level since May 2007 in February
The KBC Bank/ESRI consumer sentiment index was at its highest level since May 2007 in February

Irish consumer sentiment rose marginally in February, according to the latest index from KBC Bank Ireland and the ESRI.

It was the third consecutive monthly gain, bringing the index from 84.6 in January to 85.5 last month.

Although the monthly change was slight, February's reading was the strongest in nearly seven years.

The index was last higher in May 2007.

The report's authors say the trend in sentiment suggests consumers are increasingly confident that the Irish economy is emerging from the extreme difficulties of recent years.

"The rise in the index is primarily the result of a reduction in the negative influences on sentiment rather than the emergence of an array of extremely positive factors boosting confidence," they added.

The report notes that there is no evidence of a dramatic pick-up in spending taking hold.

The improvement in Irish consumer sentiment in February mirrored a similarly limited gain in the corresponding US indicator last month.

"Analysts attributed that outcome to the restraining influence of poor weather in the US and an associated weakness in the jobs market on the mood of a consumer who has become generally more confident about the outlook for the US economy of late," Austin Hughes, chief economist with KBC Bank said.

February also saw an unchanged consumer confidence reading in the UK as some pull-back in the current buying climate offset improvements in views on the future.

There was also an unexpected if modest fall in consumer confidence in the Euro area last month.

"In summary, we think the headline consumer sentiment number for February points to an ongoing if modest improvement in confidence of late. We think the make-up of the February results is a little surprising and may prompt some correction in the index in the next month or two. Of course, a weaker buying climate could be offset by further gains in other components of the survey," the report concluded.