Consumer confidence increased in August, but the public remains some way off being strongly optimistic, a new survey shows.
The latest consumer sentiment index published yesterday by KBC Bank Ireland and the ESRI shows confidence grew marginally last month and the index exceeded 100 points for only the third time in 10 years.
The index follows last week’s July retail sales data, from the CSO which showed a near 12% decade-high rise in consumer spending volume.
However, those figures were heavily skewed by car sales (due to the recent introduction of the ‘152’ number plates) and were effectively only up 0.6% on a monthly basis when core sales were measured alone.
Similarly, yesterday’s sentiment survey warns that consumers remain relatively cautious about household finances, while there are also hints that they may be “a little more concerned about recent developments in various parts of the global economy”.
“We still remain some distance from a sentiment reading that might be interpreted as suggesting that a broadly-based feelgood factor has taken hold.
“Recurrent problems in various parts of the world economy may be playing some role in this, but the main factor restraining the improvement in Irish consumer confidence, at this point, appears to be the lack of a widely felt boost to personal spending power,” the report’s authors said.
While KBC and the ESRI said that the sentiment trend is positive, on a whole, they suggested “a range of influences may be making consumers a little confused about the scale and sustainability of the economic recovery now underway.”
“The details of the Irish sentiment survey were mixed in August, with three of the five elements of the index rising and the remaining two falling month-on-month.
Views on the 12-month economic outlook improved modestly.
In view of very strong GDP data and buoyant exchequer returns, released through the survey period, this might be regarded as a slightly disappointing outcome,” they said.
Nevertheless, August’s survey reading of 101.1 was back up from 99.7 in July and closer to the nine-year high of 102.8 reported in June.
“Overall, it appears that consumers are feeling much more confident this month, about their personal financial situation and more general economic climate,” said Ciara Morley of the ESRI.
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