Consumer sentiment up, report shows

THERE was a rise in consumer sentiment in April, with the monthly IIB Bank/ESRI index rising to 98.8 from 92.3 in March.

However, the level of consumer optimism is still well below levels measured nearer the start of this year.

The abolition of the Groceries Order and a likely delay in further European Central Bank interest rate hikes have been attributed to a generally positive outlook this month. But consumer caution is expected to be strengthened by the recent rise in energy costs and renewed fears of higher borrowing costs.

IIB Bank chief economist Austin Hughes said: "Irish consumer sentiment slumps on job worries and the average household has seen its living costs rise significantly of late on foot of higher monthly loan repayments and sharply increased energy costs.

"In both instances, a threatening trend remains firmly upwards. It also seems that while the largesse of Budget 2006 has begun to fade into memory, the benefits of SSIAs and perhaps another generous budget are still judged to be some distance away."

However, he said retail sales remain strong.

He continued: "Our interpretation of the April data is that they suggest consumers might have over-reacted to a spate of job losses in late February and early March.

"That said, this month's improvement in sentiment in relation to the jobs market is relatively modest and underscores our assessment that job loss announcements matter far more to consumers than news of jobs gains."

The number of consumers fearing a further increase in unemployment levels eased from 53% in March to 43% in April. About 23% anticipate a fall in unemployment in the current year.