Irish consumer sentiment rises as job prospects improve

Irish consumer sentiment rose last month with better job prospects in the labour market cited as a positive driver.

However, the survey was conducted before the result of the UK’s referendum on EU membership, which is likely to have adverse implications for the economy here.

As a result, its headline index rose to 103.4 in June from 98.1 in May, effectively reversing the weakness reported in the May survey.

The report, which is compiled by KBC bank and the ESRI, noted that while the very poor sentiment associated with the financial crisis had now faded it had not been replaced by a broad-based “feel good” factor.

KBC’s chief economist Austin Hughes said the fact that most months moved in the opposite direction to the previous month implied that Irish consumers were having significant difficulties in assessing what a constantly changing global and local economic picture might mean for them.

“Such difficulties have increased notably in the wake of the UK decision to leave the EU because of the profound uncertainty as to exactly how and when Brexit might affect the circumstances experienced by the typical Irish consumer,” he said.

Uncertainty

By increasing both uncertainty and downside risks to the economic outlook, Mr Hughes said Brexit was likely to weigh on Irish consumer sentiment in coming months.

The June survey here was at odds with a softer trend in comparative surveys abroad.

The US sentiment index dipped after a strong May reading on increased concerns about the outlook for economic growth, while the euro area consumer confidence fell back on similar concerns.

In the UK, sentiment was little changed in June as worries about poorer economic conditions were offset by improved household finances.

All five sub indices in the Irish survey improved in June, reversing a broad-based decline the previous month.