Recovery still missing ‘feelgood factor’, says survey

The economic recovery is still failing to generate a “feelgood factor” because household incomes are not rising significantly, according to the country’s leading consumer sentiment survey.

The latest report from KBC Bank and the the Economic and Social Research Institute (ESRI) found its consumer sentiment index slipped in May to its weakest level since last December.

“While Irish economic conditions are improving, this is not translating into broadly based and palpable gains in consumers’ financial circumstances,” said KBC chief economist Austin Hughes. “In turn, this means that sentiment and household spending lack a feel-good factor that would encourage sharper increases in these areas.”

Mr Hughes suggested “lacklustre” income tax receipts and poor car sales may be telling a similar story.

The slip here contrasts with similar surveys which show a modest increase in the eurozone and the US.

Around a quarter of Irish consumers say their finances have improved, but a further quarter of the survey said their living standards had gotten worse.

“It may seem strange that Irish consumers are more sensitive to the risk of an economic setback than to the reality of relatively robust growth at present,” said Mr Hughes. “This is largely a legacy of the recent downturn. In part, this reflects understandable fears.

“At a more basic level, it’s simply because the current financial circumstances of many Irish households mean they can’t afford not to be nervous. Some sense of the limited nature of the turnaround in household finances is indicated by the table.”

With consumers remaining cautious, Daniel Foley at the ESRI said that they appear to be concerned about the outlook for the economy.

“The May sentiment reading hints at an Irish consumer who is more influenced by the risks posed by an uncertain economic outlook than the reality of a string of strong Irish economic indicators of late,” said Mr Foley. “This partly reflects painful memories of the recent global downturn but it likely owes more to the fact that continuing pressure on household finances simply means many consumers can’t afford not to be nervous.”


Want to be cultured this Christmas? From TV to podcasts to books, Ed Power has the definite list of everything you missed this year - so you can curl up on the couch and catch upThe definite list of everything you missed this year

Artist Ciara Rodgers teaches older people how to rediscover their creativity and regain confidence, says Rowena WalshBrush with art: Discovering your creative side in later life

Furniture, paintings, jewellery and silver are on offer at James Adam in Dublin, writes Des O’SullivanAll set for home run: See what's on offer at the James Adam sale in Dublin

It’s not too late to hunt out a unique gift. Des O’Sullivan previews sales in the lead-up to the festive seasonA flurry of auctions in Munster sets the scene for Christmas

More From The Irish Examiner