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Consumer sentiment improves for second month after Covid-19 collapse

Consumer sentiment improved in June for the second month in a row, but remains well below levels recorded before the onset of the COVID-19 crisis, a survey showed today. 

The KBC Bank consumer sentiment index climbed to 61.6 in June from 52.3 in May, but remains some distance from February’s pre-pandemic reading of 85.2. 

In April the index had dropped to 42.6 in the sharpest month-on-month decline in the survey’s 24-year history. 

The recovery in consumer sentiment mirrors gains in similar indicators for the UK, the US and the euro zone, and suggests the easing of lockdown measures is making consumers feel slightly less negative about the economic outlook, the index compilers said. 

“There was a significant improvement in expectations for household finances a year from now but, again, this needs to be seen in context,” said Austin Hughes, chief economist at KBC Bank Ireland. 

“Only one in 20 consumers envisages better financial circumstances through the next 12 months whereas one in three expects a deterioration,” the economist added. 

Ireland in March shut pubs, restaurants and non-essential retail outlets and ordered people to stay at home.

But the Government has announced plans to accelerate the reopening of its economy as the rate of Covid-19 infections falls.

Austin Hughes said that fading fears should support stronger spending.

But he but warned that “the cautious tone of responses to questions on personal finances suggests a still fearful and, in many instances, financially damaged Irish consumer”.

“To set sentiment and spending on a solid rather than a shrunken trajectory, we think the survey emphasises the need for an ambitious and early fiscal stimulus to limit the lasting damage of Covid-19 to the Irish economy,” the economist added.

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