Consumers braced for slowdown - IIB

Irish consumers appear to have braced themselves for bad economic news more than those in other countries, according the IIB/ESRI survey of consumer sentiment in March.

During the month the index was effectively unchanged at 63.3, compared to 63.5 the previous month, so small a difference that IIB chief economist Austin Hughes said the reading was broadly stable. The corresponding figure for March 2007 was 78.5.

If this reading was confirmed over the next two to three months it may suggest a relatively contained slowdown in consumer spending this year, the report concluded.

Noting that the confidence reading for Irish consumers was more resilient than readings from other countries, Mr Hughes said "that the pronounced weakening evident in the IIB/ESRI sentiment measure since early 2007 might reflect a relatively early recognition of emerging difficulties on the part of the Irish consumers".

Although views on the job market improved slightly last month and sentiment in relation to job prospects is not in freefall, Mr Hughes said: "It must be recognised that the March reading still suggests a fairly entrenched negative view of job prospects".

He also noted that there was an improvement of the spending climate in March, in part due to the St Patrick's Day and Easter holidays.

Mr Hughes said the increase may also stem from selective price discounting as Irish retailers respond to a disappointing start to the year.

The IIB/ESRI survey said it was likely that consumer sentiment would fall further in April - possibly to a record low on the back of the exceptional turmoil in financial markets in the week before Easter.