CONSUMER SENTIMENT here continues to weaken, as rising unemployment, tougher Budget measures and the ongoing global banking crisis have caused consumers to become more concerned about the outlook for their household finances over the next 12 months.

According to the KBC Ireland/ ESRI Consumer Sentiment Index, consumer confidence fell by 42 per cent in the 12 months to October, down to 42.0.

Unemployment is causing particular concern among consumers, and the latest statistics from the Department of Enterprise, Trade and Employment indicate that this concern is well placed.

In the year to October 30th, there were more than 30,000 redundancies, an increase of 50 per cent on the previous year, indicating that in an average week, 725 jobs are lost.

More than half of the redundancies were in construction and manufacturing, but the number of jobs lost in the services sector was also high, at 33 per cent.

The consumer confidence index, compiled from a survey of 960 people during the first two weeks of October, remains slightly above the record low of 39.6 recorded in July and follows two months of improvement.

On a month-to-month basis, the index shows a marginal decline in consumer confidence of just 3 per cent from September to October.

Austin Hughes, chief economist of KBC Ireland, said that a couple of factors probably cushioned the blow last month.

"First of all, Irish consumers have been bracing themselves for tougher economic conditions for some considerable time," he said. "Second, falling oil prices and lower borrowing costs imply slightly less strain on household finances in the coming year. This is an important offset to the torrent of gloomy news and may limit the weakness in consumer spending in the year ahead."

Moreover, he added, confidence remained stronger in Ireland compared with other countries, such as the United States, where consumer sentiment plunged at its fastest rate ever in October.