Irish consumer sentiment weakened in April, according to the latest IIB/ESRI consumer sentiment index. The index fell to 97.3 last month from 104.2 in March.
IIB's Austin Hughes said that consumer sentiment has been fairly flat since the end of last year, but that the current reading is still indicative of a healthy consumer in a solid economy.
The economist says that different factors may be weighing on confidence at the moment. Among these is evidence of a 'soft patch' in the global economy with consumer sentiment falling in both the UK and US in recent months. There have been clear signs of a slowdown in the UK and some concerns about fading vitality in the US upswing.
A second set of constraints on consumer sentiment relates to the financial positions of Irish households. Mr Hughes says that households may be signalling an increasingly marked disconnect between very buoyant economic commentaries and restrained perceptions of their own spending power. This causes consumers to downgrade the assessment of their current financial situation.
'While the April sentiment reading points to a more hesitant consumer, it is still consistent with a healthy trend in household spending,' IIB's Hughes said. 'We see an increase of 4% in 2005'.
'However, the main message of the data is that the mood of consumers is one of cautious optimism. Certainly these data don't suggest a broadly based spending spree is underway,' he added.
Commenting on today's data, the ESRI's David Duffy says that current economic uncertainty is being reflected in a shift in consumer perceptions.
'A substantial part of the recent decline in sentiment is due to a move from a positive to a neutral outlook by respondents. This suggests a more cautious outlook is now taken by consumers,' he added.
April's index also shows the forward-looking component, the expectations index, was down to 91.9 in April from 99.1 in March. However, this is well above the reading of 84.7 in April 2004.
The Current Economic Conditions was 105.2 in April, down from 111.9 in March. It was also above the 99.8 mark recorded the same time last year.
