CONSUMER SENTIMENT IN Ireland weakened in February according the latest data from the KBC Bank Ireland/ESRI consumer sentiment index.
The index slipped back to 59.4 from a four month high of 64.2 in January with job concerns and household finances contributing to the weakening of consumer confidence.
KBC said that there is “little likelihood that a pronounced ‘feel good’ factor will develop anytime soon” in Ireland given the “considerable uncertainty” about the current trajectory of the economy.
Chief economist Austin Hughes said that the monthly changes had been volatile recently but the three month average fell from 59.2 to 57.8, suggesting an underlying trend that sentiment is weakening overall.
The largest drop in sentiment was in relation to jobs with KBC suggesting that Irish consumers’ thinking may have been impacted by a number of high-profile job loss announcements including the closure of HMV and B&Q.
Talk of public sector redundancies as the talks on a public sector pay deal or Croke Park II progressed may also have played a part.
Household finances were also raised as a concern.
Hughes said this is not unusual as there is often a drop off in consumers’ assessment of their own finances in February as a result of Christmas credit card bills and the impact of Budget measures which have taken effect on 1 January.
However the analysis also suggests that there was some improvement in sentiment as a result of the government securing a deal to abolish the promissory note payments in exchange for long-term government bonds.
This is reflected in the reading on the economic assessment of consumers which saw only a fractional decline since January.
“This may reflect the absence of any clearly negative driver of the sort that influenced thinking on unemployment as well as some positive impact from the promissory note deal,” Hughes said.
The drop in Irish consumer sentiment last month contrasted with “moderately better” readings of consumer confidence in other countries such as the US where there was a larger than expected improvement from 73.8 to 77.
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