Consumers more positive but still reluctant to spend

CONSUMERS are detecting signs of life in the economy but are resigned to seeing no dramatic improvement in their fortunes this year.

This is according to the latest KBC/ESRI consumer sentiment index, which shows consumers are more positive than this time last year but are still reluctant to spend.

Sentiment in Ireland is more positive than in other locations in Europe with experts saying that for Irish consumers the consequences of poorer public finances have been familiar for quite some time.

KBC economist Austin Hughes said Irish consumers appear to have resigned themselves to a notably more uncertain and less supportive economic future.

The index was steady in May at 65.3, compared to 65.6 in April and its all-time low of 39.6 in July 2008.

David Duffy of the ESRI said the index of current conditions was marginally lower as consumers remained concerned about the buying climate.

The forward looking expectations index was unchanged at 53.7 in May.

“Although there was some improvement in consumers’ perception of the outlook for the economy and the labour market, consumers remain concerned about the outlook for their household finances over the next 12 months,” he said.

Mr Hughes said, however, that it would be dangerous to over-analyse smallmovements, but these results could reflect some increased expectations of another tough budget in December in the light of broaderconcerns about the trendin public finances worldwide.

“The weakening in the spending climate in May may reflect heightened uncertainty, but it could also stem from the now normal reluctance to countenance major outlays until prices are heavily discounted.

“So, Irish consumers may be playing a game of ‘chicken’ with retailers ahead of summer sales,” Mr Hughes said.

“It remains the case that Irish consumers are very cautious about the general economic outlook and their personal financial situations, but the trend in sentiment in recent months hints that consumers are seeing signs that the Irish economy is stabilising and may be starting to improve,” said Mr Hughes.