Trump ‘honeymoon’ lifts Irish consumer sentiment

Irish consumer sentiment jumped to its highest level in seven months in January, according to the latest KBC Bank/ESRI index.

The lift, coming on the back of declines in four of the last five months, was put down to seasonal factors, including post-Christmas sales, and an economic and market honeymoon for the new US presidency.

Despite the political controversies generated by Donald Trump’s administration, markets remain bullish in anticipation of a massive capital spend flagged by the new president.

“The absence of immediate economic fallout and positive market reaction may have prompted a ‘relief rally’ in relation to the implications of a Trump presidency by Irish consumers,” KBC’s Austin Hughes claimed.

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As a result, the main index for January rose to 103.1 from 96.2 in December, the biggest monthly jump in two years.

Mr Hughes said much of the rise was down to seasonal factors with the boost that post-Christmas sales gave to spending plans.

Optimism

“At a more subconscious level, confidence readings may have been boosted by a significant change in focus away from economic news towards family and friends over the festive period as well as a sense of optimism and resolve that the new year may bring,” he said.

“ However, as in previous years, it seems likely that these supports to sentiment will prove temporary as consumers’ wallets and mindsets retune to more familiar and gloomier messaging in the months ahead.”

Mr Hughes also cautioned the current rethink about the prospective economic and financial consequences of the Trump presidency may also be shortlived.

“We also think the uptick in Irish sentiment in January emphasises that consumers here are still cautiously positive about the future and recent softer survey readings primarily relate to perceptions of increased risk rather the reality of deteriorating economic conditions in the Irish economy,” he added.

The rise in consumer sentiment here was largely down to an upgrading of consumers’ assessments of their own financial circumstances in January, which was largely driven by a decline in negative responses rather than any marked increase in positive responses compared to the December reading, the latest survey indicated.

The change in the jobs component of the survey was more balanced but still slightly tilted towards fewer negative readings, it said.

In contrast, a healthier assessment of the outlook for the Irish economy – albeit from a relatively low base in December – reflected a clear increase in the number of consumers expecting a strengthening of economic conditions in the year ahead, it said.