The first signs of a thawing in consumers holding back on spending on big purchases is good political news for the Government and may explain Fine Gael’s improved poll ratings, according to KBC Bank chief economist Austin Hughes.
Mr Hughes is the co-author with the Economic and Social Research Institute (ESRI) of the monthly consumer sentiment survey which suggests stirrings for the first time in years to a more sunnier outlook on their personal finances by households.
The uptick, although tentative, may suggest there are more people who will buy into the “keep the recovery going” political slogan, representing a sentiment that is going “in the right direction for the Government”, said Mr Hughes.
The macroeconomic indicators such as GDP and the fall in unemployment have improved markedly “and it may be that consumers are also feeling that that uplift is affecting them too, he said, saying that it “was entirely consistent” with the improved standing of Fine Gael in the opinion polls.
The survey of consumers in March was “notable for an improvement in expectations about household finances in the next year and a similar upgrading of spending plans”, according to KBC and the ESRI.
“The recovery in sentiment in March likely reflects a correction of particular weakness in expectations for household finances and spending plans in the February survey. However, it is also possible that Irish consumers may be beginning a fundamental reassessment of their present circumstances and prospects. It will take several months before it becomes clear if this is the case,” the survey said.
Its headline consumer sentiment reading increased to 108.1 this month from 105.2 in February. The survey is closely watched by the Government and economists as an indicator of what is going on in the c economy.
CSO figures show underlying retail sales, which exclude car sales, rose 0.6% in volume terms in February from January and were 6.3% higher from a year earlier. In value terms, underlying retail sales were also up 0.5% in the month and by a relatively more subdued 3.8% increase in the year.