Consumer sentiment recovered in January after a big fall in December, according to figures released today.

The Economic and Social Research Institute KBC Bank index shows that sentiment improved in every category.

The most significant change related to expectations for unemployment, which improved to a level not seen since mid-2007.

The ESRI said that typically sentiment improves in January, in part reflecting the winter sales, followed by a more subdued figure in February.

It said that the pattern is expected to continue and as a result some moderation is anticipated next month.

KBC economist Austin Hughes said a number of factors contributed to the turnaround - encouraging news about the Irish economy; less concern about the effects of December's budget; and heavy price discounting during the Christmas sales.

The index rebounded to 64.2 in January from 49.8 in December, completely recovering from the sharp fall seen in the final month of 2012.