The overall Irish KBC Ireland/ESRI Consumer Sentiment Index rose to 53.4 in June. This compares to a figure of 45.5 in May.
Commenting on the results David Duffy, ESRI, said:
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“The results for June show that consumer sentiment improved as consumers adopted a more positive outlook for the next 12 months.”
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“The forward-looking expectations index rose from 23.8 in May to 39.1 in June, with consumers more optimistic about the outlook for the economy, labour market and household finances.”
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“In contrast, the index of current economic conditions fell slightly to 74.6 from the 77.7 recorded in May. This is due to consumers becoming more negative in their perception of the current buying climate.”
In addition, Austin Hughes, KBC Ireland, noted:
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“The scale of the improvement in consumer sentiment in June is very surprising and could be at least partly reversed in the next month or two. That said, it does build on a positive trend in recent months. So, it hints that the worst may be over. At current levels, the sentiment index is still saying that Irish consumers are fairly nervous but they seem to have drawn some encouragement from signs of ‘green shoots’ abroad and very faint signs that some domestic indicators may be starting to stabilise”.
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“It is remarkable that Consumer confidence improved in a period in which the impact of higher levies was felt in pay packets and election results suggested considerable dissatisfaction with the Government. The rise in the sentiment index in June hints that Irish consumers may detect some progress as well as a lot of pain at present”.
Hughes added: "It would be wrong to dwell too long on the size of the improvement in the consumer sentiment index in June. The likelihood is that some of this month’s exceptional gain could be reversed in the next month or two. It is also important to note that the current level of the KBC Ireland/ESRI sentiment index implies that consumers remain extremely cautious. Significant as these caveats may be, it must be recognised that the jump in consumer sentiment in June builds on a more favourable trend that has been evident in recent months. So, it would appear that confidence has bottomed out and is showing tentative signs of an improvement. It is particularly significant that this occurred at a time when the impact of increased levies announced in April’s supplementary budget were reducing pay packets.
It is also notable that the sentiment index strengthened at a time when results of bye-elections, local elections and European elections all pointed towards a considerable level of political dissatisfaction. Against this backdrop, it is slightly surprising and very encouraging from an economic perspective that Irish consumers could discern positive economic developments of late. It may be that reasonable consumers are willing to accept a measure of pain if they detect even faint signs of progress."
