Winter sales helped consumers avoid the January blues as confidence in the economy improved last month after three months of declining sentiment.
But the traditional January bounce in consumer appetites to buy big-ticket household items was smaller than in previous years, signalling a nervous outlook for the year ahead, according to the latest consumer sentiment index published by IIB Bank and the Economic and Social Research Institute.
Sentiment in February is expected to be more subdued, and may even fall to a record low as gloomy news on the jobs front combines with the post-Christmas spending hangover.
IIB Bank chief economist Austin Hughes said consumers' willingness to respond to retailers' sharp price cuts during the January sales was encouraging, even if the smaller-than-usual lift in sentiment suggested they were bargain-hunting for targeted items rather than indulging in a spending free-for-all.
"A completely terrified consumer might regard large price cuts as symptomatic of rapidly deteriorating economic conditions rather than an unmissable opportunity to pick up some bargains," Mr Hughes said.
But although the January sentiment survey suggests consumer confidence is not collapsing, it is too early to say that a turnaround is imminent, he added.
For the second month in a row, consumers were less pessimistic about their household finances than they were about the economy as a whole, reflecting both a Budget that was "not as terrifying as people expected" and an easing in fears that interest rates will rise.
The positive picture painted by consumers of their personal finances will give them "a measure of shelter against a gathering economic storm", according to Mr Hughes.
This upgrading for household finances for both the past 12 months and the year ahead outweighed a further deterioration in sentiment in relation to general economic prospects that probably reflects edginess about the health of the US economy and a series of downbeat forecasts for the Irish economy, he said.
The phone survey of almost 1,400 consumers, which took place in the first two weeks of the year, did not pick up on signs of a weaker jobs market. The live register of people claiming unemployment benefits jumped sharply in January, amid fears that the slump in activity in the housing market may be more pronounced than had been expected.
Mr Hughes said this could dampen February's sentiment reading to the extent that it plunges below the survey's record low of 60.9 in July 2003.
The reading for January was 67.0, up from 62.7 in December.
