Rugby boosts consumer confidence

IRELAND’S success at the Rugby World cup has been credited with a major bounce in consumer sentiment last month.

Strong Irish growth data and hopes for an interest rate cut by the European Central Bank (ECB) have also been credited with the KBC/ESRI consumer sentiment index jumping to 63.7 last month from 53.3 in October, the strongest level since July last year.

Last month’s change was also the third largest monthly point increase and the eighth largest monthly change in the near 16 year history of the index.

Despite the jump the sentiment is still a considerable distance below its long-term average of 88.1.

The publication of the index was delayed this month as experts wanted to carry out a check of the findings given the substantial jump.

KBC chief economist, Austin Hughes said the sharp change in Irish consumer sentiment was not seen in other countries. British consumer confidence reported its weakest reading since February 2009.

“Searching further afield for a change more consistent with the Irish results we note that Australian consumer confidence moved higher last month.

However, the mood of Australians has been supported by a far healthier economy than that endured by their Irish counterparts. So, it is difficult to draw significant implications from the Australian confidence data that might be relevant to Ireland,” he said.

Mr Hughes said they remain cautious about the scale of the improvement in Irish consumer sentiment in October.

“In circumstances where global economic conditions worsened, concerns about major lay-off announcements emerged at home and the prospect of another tough budget drew closer,a sharp rise in consumer sentiment is not the sort of result that might have been expected.”

The survey period saw the publication of unexpectedly strong economic growth data for Ireland for the second quarter of 2011 as well as employment data that also pointed to some easing in the pace of job loss.

“At the margin, it could also be the case that non-economic influences such as the strong performances of Ireland’s soccer and rugby teams during the survey period might have played some role.”

He said he suspects that the October results are capturing some slight improvement in the mood of Irish consumers, but they would be very hesitant to conclude that confidence has returned as forcefully as the measured change in the sentiment index in October would suggest.