Consumer sentiment improved marginally in November to raise hopes the Irish economy may be beginning to stabilise but a recovery is some way off, according to an economic survey published today.
The IIB/ESRI Consumer Sentiment Index rose slightly to 66.5 in November compared to a reading of 65.9 in October. The slight improvement mirrors a recovery in similar indices worldwide but is of far more modest proportions, according to Mr Austin Hughes, chief economist with IIB Bank.
But Mr Hughes remained cautious regarding the economy's prospects in the short term. "Our best guess is that the November data suggest the slide in economic activity, in so far as it affects the Irish consumer, is easing.
"Clearly this is good news but weakness in the forward-looking elements suggest that there could be more bad news to come and even if this is not the case we could be still some distance away from an upswing," he said.
The overall measure of consumer sentiment is made up of two components - present conditions and future expectations. The improvement in consumer sentiment in November was driven by a rise in households' assessment of current conditions (to 87.5 from 84.0 in October). This is the first gain in this component since May.
When asked about future expectations, consumers were less optimistic. Forward-looking components suggest consumers still expect further economic weakness. As sentiment is still at very weak levels, this would be consistent with modest growth in economy as a whole.
Mr Hughes said the improvement may be due to Irish consumers having become accustomed to a steady stream of bad news of late, so the absence of particularly negative shocks in November might have encouraged a more positive assessment.
"Irish consumers may have begun to see the glass as half full rather than half empty," Mr Hughes said.