Irish consumer sentiment edged lower in February, as consumers remain apprehensive about potential threats to the economy and jobs in the coming year.
The KBC Bank Ireland/ESRI Consumer Sentiment Index fell by 2.4 points in February to 100.7, following a 7.2 point gain in January, driven by a decrease in the willingness of households to make large purchases.
"The February sentiment reading hints at a one-step-forward-one-step-back recovery for the typical Irish consumer. Things have clearly stopped getting worse but they are not getting dramatically better. Consumers sense some improvement in the broader economy but are also aware of notable risks to economic prospects," said Austin Hughes, chief economist with KBC Bank Ireland,
Irish consumer sentiment reached a high in February 2016, when the index rose to 108.6, but has been on a downward trajectory since, as consumers fear the impact of changes in the global environment, such as the UK’s impending departure from the EU and the election of Donald Trump as US President, might have.
Daniel Foley of the ESRI, said that a further decline in the economic expectations component of the survey, “indicates that consumers are still feeling somewhat pessimistic regarding the future economic climate”.
Pay rise
The one area of the survey that saw an improvement compared to January was in consumers’ expectations for their personal financial circumstances in the next 12 months. This is probably due to people’s expectations of a pay rise later in the year. It may also reflect wealth effects from stronger property prices and improved global equity markets of late, the report noted.
Irish consumers are not alone in feeling uncertain about the future; in the US, there was a small pullback in consumer sentiment from the 13-year high recorded in January, while Euro-area consumer confidence weakened after improvements in each of the five previous months. In the UK, consumer confidence weakened modestly after similarly moderate gains in the two preceding months.
