Consumer sentiment hits seven month high in January
Irish consumer confidence hit a seven month high in January, according to the latest Credit Union Consumer Sentiment index.
The data suggests that consumers had a less negative view of the economic and financial circumstances of households heading into 2023.
The index reached 55.2, up from 48.7 in December, and its strongest level since last June.
The report states that this uptick in confidence could be due to a number of factors including the weakening of oil prices, strong domestic economic data and the receipt of fiscal supports.
Confidence also increased in the US, which the report states likely reflected falling fuel costs and Germany where fiscal supports may have played a role.
In contrast, UK consumer confidence weakened, reflecting growing negativity about the economy and public finances.
The author of today’s report, Austin Hughes, said he believes the boost in Irish consumer confidence is partly due to the ‘less news-focussed’ time people spent with family and friends over Christmas.
“This may have eased consumer concerns somewhat,” he said.
But he pointed out that the January reading is still below the average reading recorded over the past 27 years.
“This suggests that Irish consumers remain very much aware of the economic and financial challenges that the new year holds,” he added.
All five of the main elements of the survey showed improved readings in January compared to December.
The strongest month-on-month changes were in relation to elements of the survey focussed on household finances, rather than the broader economic situation.
“This may suggest that many consumers feel they weathered the financial demands of Christmas better than they feared,” Mr Hughes said.
Today’s data shows there was a modest improvement in relation to consumer views about the prospects for the Irish economy over the next 12 months.
“This was likely driven by the very positive news on the 2022 outturn for the public finances, as well as continued low unemployment data during the survey period,” Mr Hughes said.
The survey findings show a pick-up in spending plans in January, which could be due to bargain hunting in the post Christmas sales.
However, Mr Hughes said it could be a tentative signal that many consumers believe the worst could be over in terms of the intensity of price pressures facing them.
This latest survey contained a number of special questions asking consumers how they expected a number of key economic metrics to develop on a five-year view.
The findings showed that views are now broadly balanced as to whether economic growth will be stronger or weaker in five years’ time.
This is a weaker assessment than that of a year ago.
“Our sense is that the downgrade may be due to a judgement that persistent pressures from an increasingly stormy global environment are likely to take a toll on domestic growth prospects,” Mr Hughes said.
The January survey also asked consumers for their views on the outlook for house prices, leading to mixed answers.
As in the previous survey, younger people had a more negative view than their older counterparts, while females had a more negative outlook than males.
The data shows that there were no pronounced geographic or income related differences.
An initial survey of Northern Ireland consumers showed more widespread negativity about the economic outlook.
However, views on household finances were not markedly different on either side of the border.