The KBC Ireland/ESRI Irish Consumer Sentiment Index dipped in July to 66.2. This compares to a figure of 67.9 in June.

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 the present situation. The Index of Consumers Expectations is based on consumers’ perceptions of their future financial situation, the economic outlook and employment expectations. The index value for July stood at 53.1, down from 54.1 in June. Consumers’ perception of their current situation also weakened in July, primarily due to a more negative perception of their current household finances. The value for this particular index was 85.7, compared with 88.4 in June.

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.

Commenting on the results David Duffy, ESRI, said:

•  “Consumer sentiment weakened slightly in July. However, the index remains well above the value in July last year of 49.5 and its all time low in July 2008 of 39.6.

• “The decline mainly reflects consumers becoming more concerned about their current household finances, with the Index of Current Conditions slipping to 85.7 compared with 88.4 in June.

•  “Consumers also have some concerns about the outlook. The Expectations index weakened to 53.1 from 54.1 in June, on the back of a more negative view of the outlook by consumers for the economy and labour market over the next 12 months.”

 In addition, Austin Hughes, KBC Ireland, noted:

• “After the stronger trend of recent months, the correction in Irish consumer sentiment seen in July isn’t entirely surprising.  The reality is that for most people conditions remain difficult and the future still looks uncertain.  While the Irish economy may not be as weak as during 2009, there is little to spark a clear ‘feelgood factor’.  So, at best sentiment and household spending seems likely to move in a pattern of two steps forward and one step back.”

• "The July results suggest Irish consumer sentiment is still fragile but it doesn’t seem to be sending the same signals as in the US, where tumbling confidence data is warning of a faltering recovery.  For the moment at least, the Irish sentiment survey suggest fears about jobs and incomes are still fading even if the improvement is fairly limited.”