The overall KBC
Ireland/ESRI Irish Consumer Sentiment Index rose in February to 50.3. This
compares to a figure of 48.7 in January, and a value of 59.4 in February 2010.
The February confidence reading remains above the all time low of 39.6 in July
2008 but it is still considerably lower than the all time high of 130.9 in
overall Consumer Sentiment Index stood at 50.3 in February, compared to a figure
of 48.7 in January. The corresponding figure for February 2010 was 59.4. The
3-month moving average rose to 47.8 compared to the 47.1 recorded in January.
The 3-month moving average stood at 59.1 in February 2010.
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 February stood at 37.8, up from 31.5 in January.
Consumers’ perception of their current situation
weakened in February. The value for this particular index was 68.9 in February,
compared with 74.2 in January. This is primarily due to a negative perception by
consumers of the current buying climate and their current household finances.
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 improved in February, due to an improvement in the forward looking
expectations index which rose to 37.8 in February, from 31.5 in January. In
contrast, the index of current economic conditions weakened to 68.9 in February
from 74.2 in January.
sentiment has improved, the underlying figures suggest that any recovery in
confidence remains tentative. Part of the improvement in sentiment is due to a
move from a negative to a neutral outlook by respondents, suggesting a cautious
outlook by consumers. The underlying message from the analysis is that consumers
remain cautious in the present circumstances.”
Austin Hughes, KBC Ireland, noted: “The slight rise
in consumer sentiment in February is surprising in the light of a lot of bad
news during the survey period. The run-up to the election focussed heavily on
Ireland’s economic problems and we also saw downward revisions to growth
forecasts as well as further increases in energy and food prices. In these
circumstances, the marginal increase in sentiment hints that Irish consumers
have prepared themselves for a lot of bad news. They may also have responded to
evidence of stronger global growth as well as tentative signs of improvement in
a variety of domestic economic indicators.
should be emphasised that even after the slight improvement seen in February,
current sentiment readings are far below the long term norm. So, it is clear
that Irish consumers are fairly gloomy at present and, of course, they face
further problems. In particular, looming ECB interest rate increases could take
a further toll on confidence in the months ahead. That said, February survey
results hint at some resilience in sentiment which might suggest spending may
not be quite as weak as feared.“
Austin Hughes additionally commented: "As
might be expected, the details of the Irish consumer sentiment data for February
were mixed with three of the five main elements improving relative to January
and the other two declining. The most negative reading related to the buying
climate which, as expected, worsened following the end of post-Christmas sales
and the arrival of post-Christmas bills.
There is little question that the current spending habits
of Irish consumers are very restrained and the February reading points towards
the persistence of subdued spending patterns through 2011. However, the scale
of pull-back in February was, like the seasonal increase that preceeded it in
January, relatively modest compared to the experience of previous years. So,
there is little in these data that threatens a marked reduction in consumer
spending intentions in the coming year."