Consumers feel some Christmas cheer as outlook steadies
Consumer sentiment improved in December to its best level for four months as cheaper fuel and an improved economic outlook brought some seasonal cheer to hard-pressed households, a survey showed today.
The Credit Union Consumer Sentiment index increased to 48.7 in December from 45.3 in November, the second improvement in the past three months.
The index recorded a 14-year low of 42.1 in September.
“The sense of the difficult times that they have now probably hasn’t been quite as bad as they might have expected,” said economist Austin Hughes. “The survey is particularly suited to today’s solstice; they are a bit more negative about their current conditions… but at the same time they’re seeing a little chink of light in the performance of the Irish economy.”
The survey’s authors said the improvement probably reflected the release of “relatively positive data showing low unemployment, slowing consumer and property price inflation and buoyant tax revenues as well as strong economic growth”.
They also said people were less worried that recent job losses in the tech sector might be the beginning of “a more broadly based weakening of the jobs market”.
Consumers’ outlook for the broader economy improved, though overall there was still an expectation of a difficult period ahead.
At the same time households took a more negative view of their own finances than they did before.
Despite that, their spending plans were up in the month.
“Consumers are probably feeling December is really tough because they’re noticing in terms of food bills and heating just how expensive things are,” Mr Hughes said. “But they’re also seeing reports of how the economy is doing well, they’re seeing Government tax revenues remaining very strong, so those are aspects that, I suppose, give them a little bit more positivity.
“If there are more supports in the coming year, if employment holds… they’re picking up this strain of light coming through in the darkness at the moment, and that makes them more willing to spend, particularly at a time like Christmas.”
Foreign-owned companies employ more than 275,000 people in Ireland, or one in nine workers, with more than 106,000 people employed by tech multinationals, according to IDA Ireland.
But while the survey appears to show that concerns have stopped building, the authors warned that “they haven’t gone away”.
It “remains the case that the overwhelming view is that the Irish economy will weaken in the next 12 months,” they added.
The sentiment survey also included a number of special questions, focusing on what consumers main concerns would be.
Unsurprisingly, the cost of living was the biggest issue for people – with 69% of respondents citing that as an issue.
However other, longer-term issues were also at the fore of consumers’ minds.
“Following closely behind are areas like housing and climate change,” said Mr Hughes. “I think they mesh into a broader sense of cost of living difficulties.
“It’s very obvious in terms of housing being such an issue in terms of those looking to buy or to rent, but I think also there’s an association of the current pressures on energy costs with climate change-related difficulties.
“Consumers are saying ‘maybe we need to look at these in the round’, and in that regard there’s a question for Government around stepping up measures in that regard.”