Consumer sentiment hit a two-year high in July as people's fears about the economy continue to ease.
The KBC Bank Ireland/ESRI consumer sentiment index rose to 67.7 in July from 62.3 in June - its strongest reading since June 2010.
KBC Bank said that Irish consumers remain cautious but their worst fears have receded. It noted there was no sign of any ''irrational exuberance''.
KBC's chief economist Austin Hughes said the July reading of 67.7 is still some distance below the near 17-year average of the survey of 86.8.
''The turn in Irish consumer sentiment is proving to be an extended and uneven process but it is nonetheless encouraging and suggests domestic spending may be beginning to stabilise,'' commented Mr Hughes.
''While the still fragile mood of Irish consumers could be derailed by poorer global conditions or renewed by domestic weakness, the July survey suggests that a gradual improvement in the circumstances of the Irish consumer is continuing to take hold,'' he added.
The strongest element of today's index is in relation to the outlook for the Irish economy over the next 12 months, posting its healthiest reading in almost five years.
KBC said this reflects the influence of the EU summit in June, solid Government exchequer figures and a favourable Troika assessment of the bailout programme.
''The survey suggests that the all-enveloping gloom of recent years is beginning to slowly lift,'' said the KBC economist.
28% of respondents felt the Irish economy will strengthen in the next year, while 40% predict it will weaken. But this is the smallest number of negative responses since January 2007.
The July survey also noted an improvement in the jobs outlook, although this was more modest than the change in thinking on the broader economic outlook.
KBC also said that consumers were somewhat less negative about their own household finances last month. The bank said this was not unexpected and probably reflected the cut in ECB interest rates in early July, as well as cheaper petrol and oil prices last month.
The only element of the index to weaken was consumers' assessment of the buying climate.
Mr Hughes said this was not surprising as there had been a sharp increase in this area in June due to heavy discounting in summer sales and some increase in holiday related purchases.
''The broad picture painted by the sentiment survey continues to hint at an emerging stabilisation in consumer spending, albeit at relatively low levels,'' the economist stated.
