CONSUMER SENTIMENT fell four points to 49.5 in July, according to the latest KBC/ESRI index, as unemployment concerns mounted. This compares to a figures of 53.4 in June and to an all-time low of 39.6 in July 2008. The historical average of the index, which began in 1996, is 96.

KBC’s chief economist Austin Hughes said the decline wasn’t a surprise given the large improvement in June. He said it appeared that the underlying trend was stabilising even if a return to normal conditions in confidence and consumer spending may still be far away.

The July results show that consumer sentiment weakened primarily due to consumers becoming more negative about the economic outlook for the next 12 months.

Mr Hughes noted that while the recently published IMF report, which detailed how the Government’s budgetary policy went off the rails in 2007 and 2008 and a spate of job loss announcements had affected consumer confidence, the decline in sentiment could have been much worse.

“It is notable that consumer sentiment measures weakened in Ireland and in the US in July, whereas similar indicators improved in a number of continental European economies.

“This may owe something to a notably greater fear of job loss both here and in the States, which is weighing on confidence and household spending,” said Mr Hughes.

“This raises important questions as to whether ‘speedy’ job cuts will limit the final cost in terms of employment,” he added.

The measure of how consumers view economic conditions rose to 77.6 this month from 74.6 in June, according to the survey, which was taken in the first two weeks of July and is based on over 800 responses.

The index of consumer expectations fell to 30.6 from 39.1 in June. – (Additional reporting, Bloomberg)