The KBC /ESRI Irish Consumer Sentiment Index rose to 54.2 in October. This compares to a figure of 49.6 in September, and to an all time low of 39.6 reached in July 2008. 

Commenting on the results David Duffy, ESRI, said: 

• Once again the rise in consumer sentiment is mainly due to improved consumer expectations. The forward-looking sub-index rose to 40.4 in October, from 34.4 in September.

• Index of current economic conditions showed a more modest improvement to 74.7 in October from 72.3 in September.

• Although there has been an improvement in sentiment consumers continue to be cautious. Three out of four consumers remained concerned about the outlook for the labour market.

In addition, Austin Hughes, KBC Ireland, noted:

• The October sentiment reading was surprisingly strong – the best in eighteen months and hints that Irish consumers may believe the economy has reached a turning point.  They expect conditions to remain tough for some time to come, but there is a sense that the absolute worst may be behind us.

• The pick-up in sentiment in October was fairly broadly based and may reflect a range of supportive influences.  Clear signs of an improvement in the global economy undoubtedly helped as did a further fall in Irish consumer prices and the expectation that borrowing costs will remain low for some considerable time.  It also seems that Irish consumers feel the news on jobs is slightly less awful of late and it may be the case that they are prepared to give the Government the benefit of the doubt on NAMA.

This may be true or not.

Hughes also said that although news on the "bad bank" NAMA could "have influenced consumer sentiment in October, we think a number of other factors also played important roles in what was a widely based improvement in confidence.  Perhaps surprisingly in a month in which nearly 700 proposed job cuts at Aer Lingus were the most striking of a large number of layoff announcements, the most positive aspect of the survey was the employment component.  To put this in perspective, three out of four consumers expect unemployment to rise further next year while only one in ten see unemployment easing.  Although this remains a gloomy assessment, it is markedly less awful than those made in the early months of this year.  These results seem to chime with recent live register data that suggest the pace of job loss has eased somewhat of late.  So, consumers may sense the worst new on jobs is behind us even if the employment outlook remains fairly poor. 

Consumers also upgraded their view of the broader outlook for the Irish economy in the coming year in October.  This likely owes a great deal to continuing signs of a turnaround in the international economy but it may also reflect the influence of upward revisions to a number of domestic economic forecasts including those of the Central Bank.  Again, the October reading suggests that consumers are still braced for a very tough year for the Irish Economy in 2010, with negative views outnumbering positive by more than two to one.  There is little sense that consumer are becoming particularly optimistic.  Instead, they are just a little less pessimistic about Irish economic prospects."