The overall KBCIreland/ESRI Consumer Sentiment Index decreased slightly to 45.5in May. This compares to a figure of 46.8 in April.

Commenting on the results David Duffy, ESRI, said

• “The May survey shows that consumers remained concerned across a range of economic indicators.”

• “The forward-looking expectations index fell from 27.7 in April to 23.8 in May, with consumers more concerned about the outlook for the economy, labour market and household finances.”

• “In contrast, the index of current economic conditionsrose slightly to 77.7 from the 75.1recorded in April. However, this is due to a more positive perception of the current buying climate, presumably reflecting fall prices and continuing promotions by retailers.”

In addition, Austin Hughes, KBCIreland, noted:

• “If you compare the mood of Irish consumers in May to similar surveys for other economies, it is fairly clear that powerful ‘feelbad’ forces are at work here.  In the US, consumers feel the worst of the news on jobs and the economy may be behind them and they’ve also been buoyed by rising share prices while in Europe, unemployment hasn’t really taken off as yet.  In Ireland, however, widespread job losses, lower after tax incomes and great uncertainty about economic prospects are clearly weighing on sentiment.  If anything, the surprise is that consumer sentiment isn’t lower than the May survey indicates.”

• “Irish consumers have been preparing for poorer economic conditions for more than three years.  The May sentiment results, together with signs of a pullback in spending, an increase in saving and a sustained effort to reduce debt, suggest that for many the adjustment to tough times is well advanced.”

Against a background of rising unemployment at the rate of more than 10,000 per month, which makes ministerial announcements of two-digit creation of "high quality" jobs over 3 or 5 years look ridiculous, by comparison.

Austin Hughes comments that the May sentiment survey saw a downgrading of consumers views on job prospects and the broader economic outlook.  A further significant rise in numbers on the live register and an ESRI forecast pointing towards 300,000 job losses before the end of the current downturn likely heightened fears of unemployment.  Similarly, an ongoing debate on the best policy response to adopt both in regard to the public finances and the Irish financial system has generated far more heat than light.  This too is likely to have left the average consumer feeling decidedly downbeat during May.

It is scarcely surprising that Irish consumer sentiment remains at depressed levels, he says. 

Job fears and lower after tax incomes undoubtedly weigh on sentiment at present. 

"So too does a ‘Paradise Lost’ type of adjustment to a much harsher economic climate even if this adjustment has been underway for most of the last three years," Hughes says. "In fact, the length and scale of the downswing in sentiment may mean many consumers feel they have gone a long way towards adjusting to tougher economic times.  This may be the reason that sentiment data are showing tentative signs of stabilising although a very uncertain outlook means Irish consumers continue to adopt a very cautious approach to spending."