Consumer sentiment stalls as recovery fails to boost spending

Ireland’s economic recovery is still not boosting consumers’ spending power, with rising accommodation costs and water charges among the elements weighing on confidence levels.

The latest consumer confidence index — jointly published by KBC Bank Ireland and economic think-tank, the ESRI — shows a reading of 98.5 points for May, largely unmoved from the 98.7 reading in April. The latest three-month reading shows a rise from 97.6 to 98.4 however, showing consumer confidence isn’t slipping.

While the survey shows more consumers are upbeat about their job status than at any time since 2000, the authors suggest cost of living increases including motor insurance rises and water charge bills are hampering broader spending plans.

“Consumers may need to see a more tangible improvement in their own financial circumstances or, at least, a very real prospect that this will occur before long, if the sentiment index is to move materially higher,” said Austin Hughes, chief economist at KBC Bank Ireland.

“Consumers’ assessment of the buying climate weakened less in May than their assessment of their own personal finances. So, the survey doesn’t suggest any marked retracement in consumer spending. Instead, it implies we shouldn’t expect a generalised consumer spending boom to take hold,” he said.

“A range of new job announcements of late confirmed that the improvement now underway in the Irish economy is not confined to measures such as GDP, that are somewhat removed from the everyday experience of the average consumer. May results showed half of those surveyed expect a further improvement in the jobs market in the next 12 months — the best reading in 14 years,” Mr Hughes said.

Yesterday’s survey coincided with Investec’s latest health barometer for the country’s services sector. That index returned a three-month high reading of 61.4 for May, with new business generation, job creation, profitability and confidence all on the up across the sector. Job creation among services firms reached its highest point so far this year, in May.

“Data for the sub-sectors surveyed in this report — business services, financial services, technology, media and telecommunications and travel/ leisure — illustrate that the increased hiring activity is not concentrated in any one area, with all four sub-sectors simultaneously recording growth in headcount, as they have done for 18 successive months now,” said Investec Ireland’s chief economist Philip O’Sullivan.


Homemade ice pops are handy for many reasons, they refresh on a warm day, but also you know exactly what is in them; no strange colourings or preservatives.Michelle Darmody's home made ice pops

Sometimes travel can be more about the journey than the destination, as Caroline Hennessy and her family discovered when they took a 13-hour overnight journey from San Sebastián to Lisbon to check out the Trenhotel experienceTravelling by train in Europe - with kids

The Great Hack looks at the implications of the scandal involving Cambridge Analytica and Facebook, writes Laura Harding.When tech firms go bad: Netflix's new documentary on Cambridge Analytica / Facebook scandal

Often hailed as one of the greatest animated films ever made, The Lion King has a special place in the hearts of generations of children.New King of the jungle: The director behind The Lion King remake

More From The Irish Examiner