Irish consumer attitudes braced for downturn but remaining stable

IRISH consumers may have braced themselves for tougher times better than their counterparts in other countries as consumer sentiment remained stable last month.

The latest IIB/ESRI consumer sentiment index fell fractionally to 63.3 in March from 63.5 in February. The figure for March last year was 78.5.

The change was so small that it is best thought of as a broadly stable reading, although at relatively weak levels, said IIB chief economist, Austin Hughes.

“This March reading was notably more resilient than the outturn seen in similar confidence measures in a large number of other countries. Consumer sentiment weakened sharply in the US, UK, France, Italy and Spain last month,” he said.

Mr Hughes predicts that consumer sentiment will fall further in April however — possibly to a record low — as the exceptional turmoil seen in financial markets in the week before Easter, together with bad news on the economic front, weigh on confidence.

“That said, there are signs in the March data that sentiment is not in free fall. If this is confirmed by readings in the next two or three months, it may point towards a reasonably contained slowdown in Irish consumer spending through 2008,” he added.

The consumer sentiment index comprises of 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.

Despite its relative stability last month, David Duffy of the ESRI said the index remains close to its lowest levels suggesting that consumers remain cautious.

“The forward-looking expectations index was marginally lower at 50.0 compared to 50.1 in February while the index of current economic conditions was down to 83 from 83.4 in the previous month.

“The outlook for the economy remains a concern for consumers who continue to cite rising prices and worries about the property and construction sector,” he said.

Meanwhile, British consumer confidence fell to its lowest in four years in March as banks curtailed lending and the housing-market downturn worsened, Nationwide Building Society said, as its index declined one point to 77.