Irish consumer confidence is dipping more than comparable EU countries, with households ‘very worried’ about a hard Brexit and a global economic slowdown.
That was one of the major findings of KBC Ireland and the Economic and Social Research Institute’s (ESRI) monthly consumer sentiment index, which found confidence among Irish consumers had fallen to a 46-month low.
KBC Ireland said the fall in October was “relatively modest and, consequently, doesn’t suggest panic has set in among Irish consumers”, but the cumulative drop in sentiment since July is the largest three-month decline since 2010.
The bank’s chief economist Austin Hughes said: “It seems that Irish consumers are now of the view that ‘winter is coming’ and adjusting sentiment and spending plans accordingly.
He said consumer sentiment and spending could see further significant changes in one or other direction in the next couple of months, as Brexit loomed.
He said the weakening in Irish consumer sentiment was not mirrored in other comparable economies, such as the US and the EU.
Irish consumer sentiment has even seen a notably sharper adjustment than its UK counterpart, he said.
The drop in consumer sentiment comes as the unemployment rate dropped to 5.3% in October, according to CSO figures, down from 6.6% compared to the previous year, or a decrease of 29,000.
Economist at global job site Indeed, Pawel Ardjan said competition for staff is intensifying between employers, particularly in sectors like technology, finance and construction.
Irish jobseekers have started to lose interest in moving to the UK for opportunities, he said.
“While the UK is still the top destination for Irish jobseekers looking for work abroad, its share of overseas searches from Ireland has fallen from 56% to 39% since 2015.
The UK’s declining attractiveness compared to other destinations is likely due to a combination of Brexit-related uncertainty and the decline in the value of sterling.
“Our data shows overall Irish jobseeker interest in overseas opportunities has fallen as well. This is probably driven by the strong labour market, in which many Irish jobseekers can find the job they want at home without having to emigrate,” said Mr Ardjan.
Meanwhile, Central Bank figures showed deposits from households increased €633m in September to over €103bn, a new record high.
In annual terms, household deposit lodgements were €3.7bn higher than withdrawals, growing by 3.7% over the year, the watchdog said.
Overnight deposits drove both the monthly and annual increases, with declines seen across most other maturity categories.
Merrion economist Alan McQuaid said the very high level of deposits despite ultra-low interest rates still suggests that households remain cautious, and appear reluctant to take on more debt.
“Notwithstanding the caveats relating to the credit gap indicators at this time, the September banking data continue to indicate a weak overall credit environment in Ireland. At the end of the day, credit will need to flow at a much stronger level than currently if the economy is to continue to grow strongly over the long-run in a post-Brexit environment,” he said.