Nervousness prevails among Irish consumers despite budget measures

Third of consumers said neither the Irish economy nor their own finances were doing well, according to survey

'The broad tone of Irish consumer sentiment remains cautious, as concerns remain elevated and nervousness about the outlook for jobs has increased,' economist Austin Hughes said. Picture: Gareth Chaney/Collins

Budget support measures announced earlier this month have made consumers less gloomy about their household finances, with Irish consumer sentiment improving modestly in October.

The latest Credit Union Consumer Sentiment Survey for October increased to 60.4 in October from 58.8 in September. This still suggests Irish consumers are nervous and facing significant financial pressures. 

Despite the recent gain, the index remains below the 15-month high of 64.5 recorded in July and some considerable distance below the 27-year survey average of 84.9.

Economist Austin Hughes said the uptick seems to be driven by domestic factors, as improved sentiment in Ireland contrasts markedly with weaker results in the latest readings for similar confidence measures for the US, Germany and the UK.

"The broad tone of Irish consumer sentiment remains cautious, as cost-of-living concerns remain elevated and nervousness about the outlook for jobs has increased," he said.

In response to the survey, a third of consumers said neither the Irish economy nor their own finances were doing well. The second most common response, given by one in four consumers (24%), was that while they felt the Irish economy was doing well, their personal financial circumstances did not reflect that. 

Just under one in five consumers judge the Irish economy to be doing well and say they are benefitting either a lot or a little.

A further one in 10 consumers say the economy is not doing well but they are. These responses tended to be more common among Dublin-based consumers, among those aged under 25, among those with the strongest educational qualifications and high-income households.

Hughes said from a consumer perspective, it seems both that the temperature varies significantly across the Irish economy and that household finances are affected by or insulated from economic conditions to notably different degrees. 

"For example, substantial discretionary spending power may be inferred from predominantly Irish crowds for all the country’s recent rugby world cup matches, while widely based financial distress is suggested by recent data indicating that as many as 256,000, or 12%, of domestic customers were in arrears on their electricity bills in June 2023," he said.

Four of the five key elements of the survey posted monthly gains between September and October. The exception was consumer thinking on the outlook for jobs, which weakened to its lowest level in seven months. 

The vast bulk of survey responses were completed before the announcement of the planned closure of the Wyeth plant in Limerick with the expected loss of 540 jobs.

"It seems that the ‘trickledown’ of stronger elements of Irish economic performance are felt far less by consumers than the financial turmoil from covid and cost-of-living pressures," Hughes said.