Irish consumer sentiment jumps to seven-year high

Irish consumer sentiment jumped to a seven-year high last month as fears about country’s economic outlook eased and households became marginally more upbeat about their finances.

The latest KBC Bank Ireland/ ESRI consumer sentiment index rose to 87.3 in April from 83.1 in March, pushing the index to its highest level since January 2007.

However, the report warned that even modest increases in confidence in Ireland and elsewhere had been enough to drive sentiment indices to multi-year highs.

This was more reflective of “how bad it’s been” than how much things had improved, it said.

The report also cautioned that many consumers still felt constrained in terms of their personal finances despite the improving macro-economic outlook.

A notable feature of April’s survey was consumers felt more positive about Irish economic prospects than at any time since December 2006, with around 51 per cent of respondents expressing the view that the economy would improve in the coming year.

The number of respondents who expected Irish economic conditions to worsen fell from 24 per cent in March to just 14 per cent in April.

“What makes this result particularly noteworthy is that preliminary growth data for 2013 released between the March and April surveys showed an unexpected negative GDP outturn for last year,” the report said.

Despite a raft of job announcements, views about the outlook for jobs changed little in April, suggesting it may take a noticeable step-up in hiring to increase this element of the survey from now on.

When it came to personal finances, the survey threw up a surprising result in April with views on the past twelve months improving markedly while views on the next twelve months largely unchanged.

“One possible interpretation would be that this outturn reflects some element of catch-up in the backward - looking element, perhaps because of greater confidence about property values or job security,” the report said.

Overall, the survey found consumers were significantly more positive about the general outlook for the Irish economy than they are about their personal finances.

Three times as many consumers expect the Irish economy to improve in the next twelve months as expect their personal finances to improve.

“So, it would seem that the recovery is predominantly something Irish consumers are reading about rather than experiencing at first hand.”

The uptick in Irish consumer sentiment last month mirrored gains in similar indicators for the US and the UK.