The mood of Irish consumers improved in April as news of layoffs earlier in the year appeared to fade. The consumer sentiment index from Irish Intercontinental Bank (IIB) and the Economic and Social Research Institute (ESRI) rose to 98.8 in March, up from 92.3 in February.

The improvement partly reverses sharp declines in February and March, attributed to high-profile layoffs.

"The most important factor was that the sequence of high-profile layoff announcements that had a major negative impact on the March sentiment reading did not continue this month. In addition, consumers probably also drew some comfort from a likely delay in the timing of the next ECB interest rate increase", IIB chief economist Austin Hughes said yesterday.

While fears of job losses have eased since March, consumers remained on balance pessimistic about the job market in April.

The share of survey respondents expecting unemployment to rise in the coming year eased from 53 per cent to 43 per cent, but remained higher than the 23 per cent share expecting a fall in unemployment.

"Greater job insecurity in Ireland at present is weighing on consumer sentiment, even at a time when the prevailing unemployment rate is extremely low," Mr Hughes said.

This concern, added to increases in the cost of living, was preventing consumer sentiment from recovering to the levels reached early in 2006.

"The average household has seen its living costs rise significantly of late on foot of higher monthly loan repayments and sharply increased energy costs. In both instances, a threatening trend remains firmly upwards," he said.

Mr Hughes predicted that the improvement in sentiment witnessed in April would be tested in the coming months.

"Since the April survey was taken, however, there has been a sharp spike in oil prices and it now seems more likely that we will face a further ECB interest rate increase by early June at the latest.

"These elements might be expected to weigh on the May sentiment reading", he said.