Consumer sentiment rises again

Consumer sentiment rose for a fourth consecutive month in April, but any marked increase in household spending is not expected.

The latest edition of the monthly consumer sentiment index — jointly published by KBC Bank (Ireland) and the ESRI — returned a reading of 62.5 points for last month, up from 60.6 points in March.

It was the first time since early 2007 that a four-month stretch of index increases was seen.

However, while people are seemingly less worried about the country’s economic situation the survey’s authors say we are still cautious and the improvement in the mood of the nation is only a modest one.

“The improvement in consumer sentiment doesn’t appear to reflect a notably more positive view of current circumstances, but instead it seems consumers are notably less fearful about more extreme downside risks to the economic outlook,” said KBC Ireland chief economist Austin Hughes.

Mr Hughes said the “gradual thawing” of the economic climate is unlikely to prompt any marked rise in household spending.

“However, even a mood shift of this nature should offer a measure of support to domestic demand through the balance of 2012. While spending power is still severely constrained, a strong “pre-cautionary” motive for postponing major purchasing decisions could begin to slowly fade as the threat of sharply poorer economic circumstances diminishes.”

Mr Hughes said that while things seem to be moving in the right direction, Irish consumers are still some way off a feelgood factor.

“If the sort of economic tremors that repeatedly undermined confidence through the past couple of years can be avoided through the remainder of 2012, the fear factor should ease further,” he said.

“We remain a considerable distance from conditions in which a feelgood factor might emerge, but in a still very uncertain world, a continuing easing in nervousness among Irish consumers is probably about as much as could reasonably be expected and should begin to underpin domestic spending.”

The April survey, despite showing moderate continued growth in positive sentiment, didn’t signify any huge changes in consumer thinking; with four of the five main elements of the index only recording modest increases and the fifth — sentiment regarding employment — posting a decline.


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