Consumer sentiment improved - report

IRISH CONSUMER sentiment surprisingly improved last month as households become slightly more optimistic, says a new report.

The survey results for Ireland mirror similar sentiment gains in the US, Denmark, France and Germany. The KBC Ireland/ESRI measure of consumer sentiment rose to 46.8 in April from 44.2 in March, the first monthly increase since last December.

Austin Hughes, chief economist at KBC Ireland, admitted the improvement was quite a surprise.

“Not only was there a very tough Budget but there were also some notable job losses. We should be cautious not to make too much of one month’s results but, taken at face value, the April sentiment reading points towards a greater measure of resilience among Irish consumers than might have been expected.”

The April index was conducted during the first two weeks of the month and included the Budget and high-profile job losses at Dell and Schering Plough.

Mr Hughes cautioned that the reading should not be seen as a turning point and may reflect that the Budget was not as tough as had been feared and that, for most taxpayers, the full impact of the changes will not be obvious until their May pay packets. “It should be remembered that lower interest rates and price cuts across a wide range of areas are helping Irish consumers handle what is without doubt an extremely difficult economic climate. Although we should await confirmation in next month’s survey, it would be surprising if Irish consumers completely underestimated the impact of the recent budget on their household finances,” he said.

A series of interest rate cuts by the European Central Bank since last October has helped lift consumer sentiment by lowering mortgage repayments.

ESRI economist David Duffy said while sentiment improved last month it remained close to record lows. “The index of current economic conditions fell slightly to 75.1 from 76.2 in the previous month. However, the forward-looking expectations index rose to 27.7 compared to 22.5 in March.”