Irish Economy
Irish Economy 2014: Consumer sentiment slightly down in March
By Finfacts Team
Apr 7, 2014 - 5:08 PM

Irish Economy 2014: The overall KBC Ireland/ESRI Consumer Sentiment Index fell to 83.1 in March, from 85.5 in February. The 3-month moving average increased to 84.4 from 83.3 in February, a seven-year high and the eleventh consecutive increase.

The Consumer Sentiment Index comprises two sub-indices; an index of consumer expectation that focuses on how consumers view prospects over the next 12 months and an index of current economic conditions, focusing on consumers’ present situation. The Index of Consumer Expectations is based on consumers’ perceptions of their future financial situation, their economic outlook for the country as a whole and employment expectations. This sub-index increased to 78.1 in March, from 75.6 in February.

The Index of Current Economic Conditions is based on how consumers feel about their current financial circumstance compared to 12 months ago, as well as their perception of the current buying environment for large household purchases. The Index of Current Economic Conditions decreased to 90.4 from 100.2 in February.

The data was obtained from telephone interviews during the first two weeks of the month with around 800 completed questionnaires. The data were re-weighted in line with gender, age and level of educational attainment to ensure the data is fully representative of the national population of adults. Each index is calculated by computing the relative scores (the percent giving favorable replies minus the percent giving unfavorable replies (the balance), plus 100) for each question used in the different indices. Those who reply “Don’t Know”, “Remain the same” are excluded from the index calculations. Each relative score is rounded to the nearest whole number. The sum of the relative scores is then divided by the base period total for each index.

Kevin Timoney, ESRI, commented: “The Consumer Sentiment Index fell 2.4 points lower in March, to 83.1 from 85.5 in February. The three-month moving average increased to a seven-year high of 84.4.

“The Index of Current Economic Conditions accounted for the much of the monthly decrease. Respondents viewed their current household finances and the buying climate for large consumer goods more negatively than in February.

“The Index of Consumer Expectations improved to 78.1 in March, its best level since January 2007. Labour-market expectations were especially positive, while the outlook for the general economy weakened.”

In addition, Austin Hughes, KBC Bank Ireland, noted:  “The small drop in consumer sentiment in March isn’t all surprising. It largely reflects an expected but fairly modest correction in spending plans when New Year sales finish and the flurry of new registration car purchases are largely completed. Our sense is that property related spending has also supported this element of the consumer sentiment survey in early 2014. As such, the small decline in the sentiment index in March doesn’t seem to suggest any break from a gradually improving trend in Irish consumer confidence.

“While we think that the mood of consumers is still continuing to improve, the small decline in the sentiment index in March suggests that a range of factors is restraining the scale of recovery. The most important reality for many consumers is that their personal finances remain under pressure. As a result, they are not in a position to step up spending even as fears about the Irish economy and the outlook for jobs ease. At the margin, the March results also show that weak data or renewed fears about the economic future are likely to raise questions about the durability of the upturn.”

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