Improved job prospects lifted a key measure of Irish consumer sentiment to 85.7 in May from 83.0 in April, the IIB Bank/ESRI Consumer Sentiment index showed today.
"The deep fears of job loss that dominated the early months of 2007 continue to fade," said Austin Hughes, chief economist at IIB Bank.
"That said ... what we are seeing is some easing in negative influences on sentiment rather than any great surge in optimism," he added.
A number of high-profile companies, including Motorola and Proctor & Gamble, cut their Irish workforces earlier in the year, helping drive consumer sentiment in March to its lowest point since December 2003.
Mr Hughes said commitments to cut taxes by major political parties during the recent general election appeared to have played an important role in "encouraging a more upbeat assessment" of spending power by consumers.
"A failure to make good on those promises could threaten a significant step-down in both consumer sentiment and spending over the balance of 2007," Mr Hughes said.
"Any looming changes in borrowing costs are more likely to hurt than help sentiment spending," he said of expectations the European Central Bank will increase interest rates further in June.
The forward-looking expectations component of the index rose to 77.7 in May from 72.4 the month before, while people's perception of the current economic climate dipped to 97.7 from 98.8 in April.