Figures from IIB Bank and the ESRI show that consumer sentiment in December improved sharply from the previous month. The overall IIB/ESRI Consumer Sentiment Index rose to 103.9 last month from a level of 92.6 in November - its lowest level since May.
The big improvement was driven by a more positive assessment of employment prospects. More consumers now expect unemployment to fall than to rise in the next 12 months - this is the first positive balance since February 2001.
The sentiment gain also reflects favourable reaction to last month's Budget from Finance Minister Brian Cowen. IIB Bank's Austin Hughes suggests that consumers probably felt the general thrust of Budget 2005 was appropriate and notably devoid of unpleasant surprises.
'On the evidence of previous surveys, it also seems to be the case that consumers recognise that sensible budget policies imply a brighter economic outlook whereas 'giveaways' will have to be paid for in the future,' he said.
The forward-looking sub-index, the expectations index, rose to 104.7 in December from 87.9 in November. The index of current economic conditions rose modestly to 102.6 in December from 99.6 in November.
'The overall rise was driven by an improvement in consumer expectations,' commented the ESRI's David Duffy.
'In December, consumer become more positive about the outlook for the labour market, the Irish economy and their household financial situation over the next 12 months,' he added.
