Consumer sentiment moves higher in April as modest recovery continues

Tuesday 13 May 2014 13.23
KBC Bank Ireland/ESRI consumer sentiment index rose to 87.3 in April from 83.1 in March
KBC Bank Ireland/ESRI consumer sentiment index rose to 87.3 in April from 83.1 in March

Consumer sentiment improved in April after a modest correction in March, but consumers remain more cautious about their personal finances than the general economic outlook.

The latest KBC Bank Ireland/ESRI consumer sentiment index rose to 87.2 in April from 83.1 in March. 

The index is now at its highest level since January 2007, but KBC Bank cautioned that the improvement marks a modest recovery from very poor circumstances.

It said the figures suggest a cautious improvement rather that a surge in confidence among consumers in Ireland.

"It is clearly good news that things are getting better but the multi-year highs now being achieved say more about how poor sentiment has been in recent years rather than how confident consumers are at present," commented KCB Bank Ireland's chief economist Austin Hughes.

He said a notable feature of the index was that consumers feel more upbeat about the country's economic prospects than at any time since December 2006. 51% of respondents believe the Irish economy will improve during the year, while those who expect economic conditions to worsen fell to 14% from 24% in the previous survey.

However, consumers' views about the outlook for jobs was little changed in April, despite a range of new job announcements in the recent weeks. 

Three times as many consumers expect the economy to improve in the next year as expect their personal finances to improve. "It would seem that the recovery is predominantly something Irish consumers are reading about rather than experiencing it first hand," Mr Hughes noted.

The economist said the continuing improvement in sentiment points to an on-going if modest recovery in the circumstances of the average consumer here.

"We don’t think the fact that the index has reached its best levels since early 2007 should be read as suggesting that Irish consumers are extremely comfortable or exceptionally confident at present. Instead, the encouraging news is that consumers feel things are moving in a broadly positive direction," he added.