While the latest KBC Bank Ireland/ESRI consumer sentiment index shows a marginal decline for July, the slip was more closely linked to concerns over Irish economic growth and the domestic labour market.
“While the UK referendum result has had a dramatic impact on financial markets and prompted an exceptional amount of media commentary in Ireland and elsewhere, the immediate implications for the average Irish consumer might be seen as notably less concrete than other developments that typically weigh on sentiment, such as news of major job lay-offs or the prospect of looming changes in key areas of public spending or taxation,” said KBC Ireland chief economist Austin Hughes.
“Our sense is that deep uncertainty in relation to so many key aspects in relation to Brexit — from when it might occur to what might be the everyday implications for Irish consumers of the UK’s eventual post-exit relationship with the EU — meant that the UK referendum result wasn’t seen as posing clear and immediate risks to Irish household finances.”
That said, confidence in the economy has weakened to its lowest level in nearly three years and job sentiment is at a two-year low. KBC said the delivery of a credible budget in October “now assumes even greater importance”.
Meanwhile, latest preliminary employment figures, from the CSO, show that Ireland’s unemployment rate remained at 7.8% in July; the same level as June and May.
Davy Stockbrokers’ chief economist Conall Mac Coille said it is too early to suggest there is a slowdown in the labour market — as the CSO figures tend to be heavily revised — and too early to suggest Brexit is playing any negative role.
“It is too early to discern any negative effect from Brexit on Irish companies’ hiring decisions,” he said.
“We still do not expect any significant impact on the pace of Irish employment growth from Brexit until late 2016 at the earliest.”
Business representative group Isme, meanwhile, said the seemingly stalled jobs figures are due to high business costs and that cost reduction must be prioritised by Government to assist job creation.
It added that the Government needs to better tackle ‘cost-creep’ in the business sector.