Irish consumer sentiment fell in in
June, highlighting the continuing difficulties that Irish households face.
The KBC Bank Ireland/ESRI Consumer
Sentiment Index dropped to 56.3 from 59.4 in May. While the monthly change was
relatively modest, the June reading is the weakest since February and also
resulted in the first decline in the underlying trend - - as indicated by the
three month moving average - - since December 2010.
Sentiment improved materially in early 2011 but against a backdrop of Irish
consumers faceing significant pressures in terms of a still threatening economic
outlook, an ongoing risk of job loss and the prospect of a further squeeze on
household spending power from future budget measures and looming ECB rate
increases. In these circumstances, it is most unlikely that sentiment or
spending could exhibit a straight line upswing.
Any progress for Irish consumers and
for the economy as a whole is more likely to come in a two steps forward one
step back fashion. In this context, it is significant that consumer sentiment
ended the first half of 2011 notably stronger than it ended 2010 (December 2010
reading, 44.4). The fact that sentiment is still lower than a year ago (June
2010, 67.9) simply reflects the trauma seen in the latter stages of last year.
The drop in Irish consumer sentiment in June mirrored weaker readings from
similar measures for other countries this month. The corresponding US
indicators dropped more than expected to continue a series of lacklustre
readings through 2011.
The ‘flash’ estimate of Eurozone
confidence also edged lower although it remains broadly consistent with a patchy
improvement in sentiment in Europe. The coincidence of weaker sentiment across
several countries in June testifies to a significant element of shared
uncertainties and concerns in the current global environment. Whether it may be
specific influences such as the ongoing Eurozone sovereign debt crisis or
broader concerns relating to incomes and employment, a range of worries prevail
that are not completely unique to Irish households.
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.