Consumer sentiment dips as GDP numbers dent recovery hopes

Irish consumer sentiment dipped last month as weak GDP data, released at the end of June, dented hopes of recovery.

The KBC Bank Ireland/ESRI Consumer Sentiment Index fell to 68.2 in July after bouncing to 70.6 the previous month.

However, KBC said the 2.4 point drop should be seen in the context of a 9.4 point rise between May and June which brought the index to its highest level since October 2007.

“Irish consumer sentiment eased back somewhat in July following the sharp increase reported in June,” KBC said.

”In part, this drop is an understandable correction to the outsized increase of the previous month but it also likely reflects Irish consumers’ heightened sensitivity to disappointing news on the economic front.”

KBC noted the Irish reading contrasted with the "feel-good" factor emerging in the US and across Europe, where comparable sentiment measures rose significantly.

"Because the July 2013 results for Ireland are the third strongest in almost six years, they are broadly consistent with the recent trend in other countries of late," KBC said.

The July figures show sentiment among Irish consumers fell in four of the five key components of the index.

Gloomier sentiment about the job market at the beginning of July was linked to a string of media reports further possible job losses at Ulster Bank and the loss of a service contract at Hewlett-Packard.

Consumers were also slightly more negative in their assessment of their own household finances in July compared with the previous month, albeit the change was relatively modest.

KBC linked the negative sentiment to concerns about the possible scale and nature of austerity measures in next October’s Budget.

However, it said slightly more encouraging news on the housing market and persistently low inflation should have acted in the opposite direction.

One element of the survey which saw an improvement in July was the buying climate which may have been linked price discounting in summer sales.