Consumer confidence at 3-year high

CONSUMER confidence has hit a three-year high but a negative feeling about the future still remains with hiring unlikely to pick up any time soon.

The KBC/ESRI consumer sentiment index increased to 67.9 in June, compared to 65.3 in May and its all-time low in July 2008 of 39.6.

It is now at its highest level since October 2007.

KBC economist, Austin Hughes said the results are encouraging but they suggest consumers are still very cautious and conditions remain difficult.

“They also hint that fear is fading and many consumers are beginning to sense an improvement in general economic conditions and their own circumstances,” he said.

Almost half of those surveyed said they were negative about the outlook for the economy.

“These results point towards an economic recovery that may be modest and fragile and one that is not being felt by all, but, nonetheless, they suggest the Irish economy is moving in the right direction,” he added.

Mr Hughes said morale among European consumers was hit in June by growing concerns that living standards will weaken as pension and welfare entitlements are cut.

“For the past couple of years, European consumers have been cushioned to a notably greater extent from the fallout of the financial crisis. Now, as Irish consumers appear to see a little more light at the end of the tunnel, their continental counterparts are beginning to contemplate a more difficult future,” he said.

David Duffy of the ESRI said: “The improvement reflects a more positive assessment by consumers of both the current situation and also the forward looking components of the index.”

The index of current conditions rose to 88.4 compared with 82.5 in May, while the expectations index increased to 54.1 from 53.7 in May.

“Expectations rose as there was some improvement in consumers’ perception of the economic outlook. However, consumers remain concerned about the outlook for employment and for their household finances over the next 12 months,” Mr Duffy said.

Mr Hughes said: “It remains the case that consumers are overwhelmingly cautious. So, there is little prospect of a dramatic surge in spending.”