The overall KBC Ireland/ESRI Irish Consumer Sentiment Index improved to 49.6 in September. This compares to a figure of 48.7 in August, and to an all time low of 39.6 reached in July 2008.
Commenting on the results David Duffy, ESRI, said
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“The results show a moderate improvement in consumer sentiment, driven by consumer expectations. The forward-looking sub-index rose to 34.4 in September, from 28.6 in August.”
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“Although consumers were more optimistic about the outlook for the economy and the labour market in September, nearly 7 out of 10 remain concerned about how their household finances have developed over the past 12 months.”
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The index of current economic conditions fell to 72.3 in September from 78.6 in August. As well as worries about the trend in their personal finances this also reflects a change in consumer’s perceptions of the current buying climate, possibly, in part, due to the ending of the summer sales.”
In addition, Austin Hughes, KBC Ireland, noted:
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“The marginal rise in sentiment in September is encouraging. The combination of layoff announcements, controversy about NAMA and the Commission on Taxation Report might have been expected to weigh on confidence. So, it is slightly surprising that the Sentiment Index didn’t weaken last month. This suggests Irish consumers are able to detect slightly more positive signs amid the prevailing gloom.”
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“There is little doubt that Irish consumer sentiment was boosted by further signs of an improvement in the global economy. A sense that the Apocalypse has been averted meant consumer confidence measures increased in most countries last month. It may also be that Irish consumers are picking up signals of a slightly less awful jobs market. It might also be argued that consumers are glad to see policy action, even if this action is less than perfect.”
Hughes further commented: The pick-up in Irish consumer sentiment in September was a good deal less dramatic than that seen in a range of other countries as signs of improving economic conditions have all but ended fears of a global economic Apocalypse. The corresponding US measure, compiled by the University of Michigan, rose to it’s strongest level since January 2008, as did the GFK Measure of UK Consumer Confidence. Similarly, Australian consumer confidence posted it’s best reading since July 2007, while Italian consumers were in their best mood since December 2006 and their German counterparts felt better for the 5th month in a row to record the strongest sentiment reading since the middle of last year. With the end of the world seemingly averted, government stimulus packages and extremely low interest rates supporting activity and falling prices boosting spending power, it is scarcely surprising that consumer confidence has improved in many countries of late. That said, in most countries, sentiment measures remain at fairly subdued levels by historic standards because major concerns about job loss and wealth destruction remain.
It isn’t entirely surprising that the mood of Irish consumers was lifted by better news from abroad during the September survey period even if the contrast between policies designed to boost spending in other economies and the focus on budget tightening in Ireland is marked. What may be more interesting is that helpful international influences and some modestly positive domestic factors weren’t entirely overwhelmed by less favourable developments at home. On balance, the newsflow on jobs in the Irish economy was negative during the survey period. There were significant job loss announcements at Teva, UPS, Friends First, Irish Flavours and Fragrances, Georgia Pacific and Johnston Press among others.
However, there was also marginally less negative news in the shape of a notably slower pace of increase in numbers on the live register and a slight easing in pace of increase in notified redundancies. In such circumstances, it might have been expected that sentiment in relation to unemployment would have deteriorated further. Instead, there was a modest improvement in sentiment on jobs. Arguably, this suggests that the bulk of the bad news on jobs is discounted by Irish consumers. Layoff announcements no longer represent the sort of shock they did at the beginning of the year.
