Irish Economy
Irish consumer sentiment increased in July
By Finfacts Team
Aug 13, 2014 - 3:05 PM

Irish consumer sentiment increased in July to 89.4, from 81.1 in June. The 3-month moving average rose to 83.3 from 82.6 in June.

The overall KBC Ireland/ESRI 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 rose to 79.9 this month, from 71.2 in June.

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 rose to 103.5 from 95.8 in June.

The Consumer Sentiment Index, the Index of Consumer Expectations and the Index of Current Economic Conditions remain at levels equal to the first half of 2007.

The ESRI said that 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 favourable replies minus the percent giving unfavourable 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.

Austin Hughes, chief economist at KBC Bank Ireland, commented - - " We would draw three conclusions from the July consumer sentiment results. First of all, the rise in the index suggests sentiment remains on a generally improving trend.  Second, the sharp rise in the sentiment survey last month continues the notably more volatile pattern seen of late as consumers struggle to make sense of strongly conflicting signals on the health of the recovery and what that might mean for their personal finances.  Third, the confusion felt by consumers and signalled by ‘choppy’ movements in the sentiment index seems to be the result of a disconnect between increasingly upbeat commentary on the current state of the Irish economy and broadly based and continuing pressures on their household finances. For many, the recovery they are hearing about is not one they are seeing in their own circumstances."