The gap between the emerging recovery reported in recent months and the reality for many is hampering consumer confidence, new data finds.
The KBC Ireland/ ESRI Consumer Sentiment Index shows a slight recovery in confidence in June following a large slide the previous month. The Index increased marginally to 81.1 from 79.4 in June which, according to KBC Ireland chief economist, Austin Hughes, shows May’s sharp decrease was not an anomaly.
“The marginal rise in sentiment in June is encouraging but it also suggests the marked weakening in May was not an aberration.
The index comprises two factors; one looking at consumers’ outlook for the coming 12 months and the other analysing their current financial situation compared to a year ago.
Overall, consumers were slightly more pessimistic about their future financial position, the country’s economic outlook and employment expectations than they were in May.
Consumers’ current financial situations seemed to have improved somewhat in the month, however, with a rise in the figures from 90.6 to 95.8 in May.
Commenting on the results, ESRI senior research officer, David Duffy said: “Consumer sentiment rose slightly in June, following a sharp fall in May. The increase was driven by improving perceptions of the current economic environment. Households were more positive about the current buying climate and their financial situation compared to 12 months ago.
“The index of consumer expectations fell slightly in June, to 71.2 from 71.8 last month. While households expect their financial situation to improve over the next 12 months, they were more cautious in their views of the economy and labour market,” said Mr Duffy.
KBC said that while the overall recovery in consumer sentiment was very limited in the context of May’s decrease, it is encouraging to see that sentiment has not moved onto a clearly negative trend. A fall in ECB interest rates along with rising property prices are likely to have contributed to consumers’ increased confidence in their current personal finances. But difficulties at Bausch & Lomb’s Waterford plant were seen to outweigh positive jobs news, resulting in lower expectations for the economy, the bank said.
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