Irish Economy: Consumer sentiment increased in December 2013
to 79.8, from 71.0 in November. This is the highest reading since June 2007 and
the 3-month moving average rose to 75.7 from 73.4 in November.
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 consumers’ present situation.
The Index of Consumer Expectations is based on consumers’ perceptions of
their future financial situation, their economic outlook for the country as a
whole and employment expectations. This sub-index improved to 72.7 this month,
from 64.8 in November.
The Index of Current Economic Conditions is based on how consumers feel
about their current financial circumstance compared to 12 months ago, as well as
their perception of the current buying environment for large household
purchases. The Index of Current Economic Conditions increased to 90.3 from 80.2
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 favourable replies minus the percent giving
unfavourable 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 Kevin
Timoney, ESRI, said: “December’s strong performance is reflected across all
categories. Forward-looking views on the economy over the coming 12 months
improved to a seven-year peak. The index of consumer expectations increased from
64.8 in November to 72.7 this month.
“Household perceptions of their present financial situation were more upbeat in
December. As a result, the index of current economic conditions improved to
90.3, from 80.2 in November.”
In addition, Austin Hughes, KBC Bank Ireland, noted: “The driving force
behind the improvement in Irish consumer sentiment through 2013 was an easing in
fears about the outlook for the Irish economy. This continued in December and
was probably helped by a focus on a range of positive recent economic
developments as Ireland exited the ‘bailout’ programme. There also seems to be
some sense in the December survey that consumers feel the worst may be over in
terms of the impact of austerity measures on their household finances.
“The December 2013 reading was the
strongest in six and a half years. As such, it points towards a clear
improvement in the mood of consumers after what has been a very painful period.
The details show that a majority of consumers are now positive about the outlook
for the Irish economy and the prospect for jobs. However, the number of
consumers who think their personal finances will worsen in the coming year is
more than two and a half times as great as the number that expects an
improvement. This is likely to restrain any growth in consumer spending in
the coming year.”
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