Consumer sentiment brightens in June
Updated: Thursday, 11 Jul 2013 17:05
The good weather seen at the start of June may have boosted sentiment among Irish consumers, with the improving jobs and property markets also appearing to have eased fears.
The KBC Bank Ireland/ESRI consumer sentiment index jumped to 70.6 in June from 61.2 in May as all five elements of the survey posted improvements.
The strongest changes were seen in people's assessment of the outlook for the jobs market., which reflected ''encouraging'' official jobs data and a sequence of new job announcements during the month.
KBC Bank noted that the improvement in sentiment appears to owe more to fading fears on the economy and personal finances than to rapidly improving expectations.
''This also highlights that although consumer sentiment may be set on an improving trend, the current level of the index still points towards a very cautious Irish consumer,'' commented KBC Bank Ireland's chief economist Austin Hughes.
Today's survey results also reveal a substantial improvement in households' assessments of their personal finances, with sentiment returned to levels last seen late last summer before budget speculation began to unsettle consumers.
KBC said the ECB rate cut in May also had a role in boosting sentiment as borrowers with tracker mortgages began to recalculate their monthly savings.
''We also think that a combination of low inflation, early summer sales and increasing signs of improvements in segments of the residential property market could all have contributed to the more positive reading in this area,'' Mr Hughes said.
The economist said that while the monthly increase in the index likely exaggerates the degree to which the mood of Irish consumers has changed in the past month, it should be seen as signalling some modest improvement in sentiment of late.
He said that the October Budget should try and reassure Irish consumers that an end to the era of major austerity cuts and adjustments is coming within reach.
''Our sense is that the average cash-strapped consumer would judge progress in this regard in terms of a smaller hit to their spending power rather than a faster than expected decline in the deficit to GDP ratio,'' he added.