Irish consumer sentiment improved slightly in March, largely because of a slight easing of concerns about household finances, according to the latest consumer sentiment survey from KBC/ESRI.
However, the study also states “a still uncertain economic outlook” means consumers remain relatively cautious and that “this was reflected in a marginal weakening of spending intentions”.
Three of the five components of the Irish consumer sentiment survey posted stronger readings in March when compared with February.
Of these, the most notable related to the trend of improving confidence in household financial circumstances in the past year.
The March reading marks the 11th time out of the past 12 months in which the sentiment index has moved in the opposite direction to the previous month.
The KBC Bank Ireland/ESRI consumer sentiment index increased to 101.9 in March from 100.7 in February, only partly recovering the 2.4 point drop reported a month ago.
Though, the research says the three-month moving average picked up for a third consecutive month and this measure of the underlying trend has reversed the clear weakening seen through the second half of 2016.
The improvement in Irish consumer sentiment mirrors stronger readings in comparable recent US indicators but is at odds with the first weakening in euro area sentiment in six months.
The study attributes this weakening to “a combination of increased nervousness ahead of looming elections in a number of countries, renewed concerns about Greek debt prospects and ongoing worries about Italian economic and financial frailties”.
Looking ahead to the next few months, the survey said: “In the absence of major domestic developments in the next couple of months, we think the major influence on Irish consumer sentiment could be the tone of initial Brexit negotiations and the extent to which a conciliatory or hostile note eases or amplifies concerns about the consequences for the Irish economy.”
Commenting on the latest sentiment survey, KBC Bank Ireland’s Austin Hughes said while the sentiment survey points towards continuing gains in Irish consumer spending, it also highlights a number of factors that could limit those gains.
He added: “There are still concerns about an uncertain economic outlook and a particular sensitivity to any bad news on jobs. In addition, the survey suggests that many household aren’t seeing any marked improvement in their spending power."
