Consumer confidence has lifted a little, although a strong majority still expect economic conditions to weaken over the next year, according to the latest Pulse consumer confidence survey, writes Cliff Taylor, Economics Editor

The monthly Irish Times/TNS mrbi survey shows that 60 per cent of people expect employment levels and the economy to weaken over the next year, with 11 per cent looking for improvement and 26 per cent anticipating that conditions will remain the same.

The latest survey - taken between mid-August and mid-September - shows some improvement from the previous one, in which 70 per cent of respondents anticipated weakening conditions.

The trend in the survey had steadily worsened from the first poll in May, which showed 55 per cent expecting conditions to worsen, up to the 70 per cent reading in the previous survey. This appeared to reflect a number of job loss announcements over the period and uncertainty about the outlook for the world economy.

However, since mid-August international economic indicators have improved somewhat, raising expectations that the worst may be over for the world economy.

This may be responsible for the lift in confidence, but more readings would be needed to confirm whether or not this is the start of an improving trend.

Interestingly, another recent consumer survey - the IIB/ESRI survey - also suggested some improvement in the consumer mood. Following the most recent surveys there have been job loss announcements, notably in 3Com, but also 800 new jobs announced for west Dublin by eBay, the internet auction company.

For the moment, however, the balance of the consumer mood is negative.

In the TNS mrbi monthly phone survey, conducted between August 19th and September 11th, consumers were asked : "Thinking about the year ahead, do you think employment levels and the Irish economy in general are set to improve, weaken or remain the same?"

Looking at the breakdown of the figures, 62 per cent of those defined as chief income earners expect conditions to worsen, although this is substantially lower than the 75 per cent reading in the previous survey.

There is no marked regional variation in consumer mood. The highest negative reading is in Munster, where 63 per cent expect conditions to weaken, while the lowest reading is 56 per cent in Dublin.

Meanwhile, the pessimistic mood is also fairly evenly spread across the traditional ABC social classes, although perhaps reflecting some hope of improvement in the jobs market the level of pessimism among unemployed people - of which 48 per cent expected conditions to weaken - was well below the average.

Some 63 per cent of people in employment expect conditions to weaken, compared to 9 per cent looking for an improvement.

Among housewives the balance is 64 per cent taking a pessimistic view - well down from 77 per cent in the previous survey - and 9 per cent looking for an improvement. For retired people 57 per cent expect the economy to weaken, compared to 69 per cent previously, and 14 per cent anticipate an improvement.

As with previous surveys, students remain the most optimistic, with just 46 per cent anticipating a weakening in conditions and 15 per cent looking for an improvement.

Looking at the breakdown by age group, meanwhile, the most pessimistic groups are 35- to 44-year-olds (67 per cent expecting the economy to weaken) and 45- to 54-year-olds ( 70 per cent).

Recent retail sales figures suggest that the weak consumer mood is having some impact in the shops, with the latest data showing a fall of almost 2 per cent in July. While the retail sales trend has been very variable, it appears that there will be only limited growth in the overall volume of retail sales for the year. Sales in the first seven months were just 1.4 per cent ahead of the same month last year.

The trend in confidence - and consumer spending - will be key factors in the overall economic outlook over the balance of the year.

Spending growth needs to revive if the overall economy is to pick up, while this will also be a key factor for the Exchequer.

So far this year VAT receipts have been reasonably firm, but an apparent fall-off in sales of some alcoholic drink products has led to weakness in excise receipts.

PhoneBus methodology

The information presented in this report was obtained as part of TNS mrbi's PhoneBus survey in the Republic of Ireland.

Sample structure:

The survey was based on a representative sample of adults, i.e. males and females aged 15 or over. Respondents are selected for interview through random digit dialling. Telephone numbers are computer-generated at random and then screened for business numbers, faxes, modems and disconnected numbers. This method of respondent selection ensures that ex-directory households are as likely to be selected for interview as listed households.

Each survey has targets that must be met in relation to sex, age, social class and region. Quota controls are imposed for region, by age within sex and social class within sex.

Supervision of the interview procedure is carried out throughout the fieldwork period. These controls ensure that the final sample reflects the profile of the national population aged 15 and over.