Consumers uncertain on recovery

Consumer uncertainty over the uneven nature of the economic recovery is reflected in a survey that shows a slight drop in optimism compared to July.

Overall, the trend in consumer confidence is still on an upward trajectory this year despite the small drop last month, from a seven-year high of 89.4 in July to 87.1, according to the latest KBC/ESRI Consumer Sentiment survey.

The slight fall is largely down to a pullback in spending plans as summer sales came to an end and back-to-school costs came into view for many families.

“Monthly changes in the index have been quite choppy through 2014 — with monthly changes moving in the opposite direction to the preceding month. Our sense is that this reflects significant uncertainty among Irish consumers as well as a still uneven economic recovery,” the report states.

Despite a slight pick-up in how consumers view household finances, twice as many are pessimistic for the coming 12 months as believe their position will improve.

The number of consumers who saw their finances deteriorate in the past year was three times greater than those whose position improved.

Confidence in the economy’s growth potential also slipped slightly in the month, with 52% of respondents currently expecting further improvement with 18% bracing themselves for a deterioration in the macro environment.

The data shows no confidence among consumers that Budget 2015 will offer a reprieve from financial pressure, but the authors of the report suggest the September survey may yet reflect an improvement given recent commentary on the upcoming budget which indicates a less severe adjustment is on the cards.

More encouraging signs are continuing to emerge in terms of the availability of jobs, however, with the employment element of the survey improving to its healthiest position since January 2007.

A series of recent job announcements coupled with further reductions in the number of people on the live register contributed to the improved outlook.

The overall results reflect a significant amount of confusion as a geographically uneven upturn affects consumers to varying degrees, with many yet to see the results of improved economic conditions.