Consumer confidence rise bucks EU trend

CONSUMER confidence in Ireland bucked the European trend showing a slight rise in March compared to a decrease in the rest of the eurozone, two separate surveys published yesterday reveal.

The overall IIB Bank/ESRI Consumer Sentiment Index for Ireland was 62.8 in March, up from 62.3 in February. A European Commission (EC) survey of 25,000 consumers showed a confidence index drop to -21 from February’s -19 in the 12 euro countries.

The EC’s economic sentiment indicator (ESI) fell by .6 percentage points for the EU as a whole and by .4 percentage points for Ireland, increasing the risk of recession.

IIB Bank chief economist Austin Hughes said the change in March is the smallest since the spring of 1998 but that details of the index hint at strong cross currents in the influences on consumer sentiment.

“These are not normal times so that isn’t entirely surprising. Clearly, the broad economic outlook is worsening and energy costs have risen, but lower interest rates may be providing an important short term offset because of the increased level of borrowing in the Irish economy in recent years.

“The broad message from the March data is that Irish consumer sentiment seems reasonably resilient. Today’s Irish data are appreciably better than corresponding numbers for the US, the UK or the eurozone. We reckon this reflects comparatively better Irish economic fundamentals as well as the fact that Irish consumer sentiment and spending have both steadily been adjusting downwards in recent years,” added Mr Hughes.

Commenting on the results, the ESRI’s David Duffy said the survey was undertaken during the first two weeks of March and so does not reflect any direct impact from the war in Iraq. The EC survey was also conducted in the run up to the war.

“The index of current economic conditions rose to 83.0 from 82.1 in February, mainly due to less negative perceptions of the present climate for making major purchases. The forward-looking sub-index, the expectations index, rose to 49.2 from 49.0 in February.

“Consumers remain concerned about the general economic outlook. The improvement in the indices is small and should really be viewed as a stabilisation,” added Mr Duffy.

Meanwhile consumer confidence in the dozen nations using the euro fell to the lowest in more than nine years in March as the Iraq war discouraged companies from hiring, increasing the risk of the 6.5 trillion economy contracting.

Economists had expected a decline to -20 in the EC survey.

In the US, consumer confidence fell this month to the lowest in almost a decade.