Rise in consumer confidence here in August not repeated elsewhere
Irish consumer sentiment improved marginally in August while confidence dipped in the US, UK and euro area.
The latest consumer sentiment index from KBC Bank Ireland increased to 86.5 in August from 84.9 in July.
That saw the sentiment index largely – but not entirely – reversing July’s drop from the two-year high of 87.2 recorded in June.
“At current levels, the survey suggests Irish consumers are gradually if unevenly putting the extreme worries of the past couple of years – fuelled first by Brexit and then the coronavirus – behind them,” Austin Hughes, chief economist at KBC Bank Ireland said.
He described the mood as relatively guarded in what remains an “uncertain environment” against the backdrop of optimism around the reopening of the economy.
“The gains in the August survey largely reflected improved ‘macro’ developments with little follow-through to household finances and this may suggest the continued absence of any broadly based ‘feel-good factor’ on the part of Irish consumers,” he explained.
The Delta variant of Covid-19 is said to have at least partly offset the positive impact of the roll-out of vaccinations.
However, the relative outperformance of consumers here is seen as partly reflecting the absence of factors that may have negatively impacted elsewhere, such as disappointing vaccination uptake in other countries, sharp price increases in the US and the fallout from severe weather events, particularly in parts of Europe.
The extent to which confidence among Irish consumers may have been eroded in recent years compared to their counterparts elsewhere has also to be taken into account.
“Our sense is that the “under-performance” of Irish consumer confidence through the past couple of years owes much to the recent and painful legacy of the financial crisis that likely fostered greater nervousness in Irish consumers in relation to the potential economic fall-out from the pandemic than in their counterparts in many other countries,” Mr Hughes noted.
The strongest areas of the Irish consumer sentiment reading for August were in relation to the general economic outlook and job prospects in particular.
New job announcements and positive trends in official unemployment data are thought to have contributed to this.
Consumers were modestly more negative about the manner in which their own financial circumstances had developed through the past 12 months.
Price increases in a number of areas, as well as damage to household incomes from the pandemic-related hit to activity, are likely to have contributed to this.
Around 15% of consumers expect their circumstances to improve in the next year with a broadly similar percentage envisaging a deterioration, the report found.
That implies that around 70% of consumers see their living standards remaining unchanged in the year ahead.