THE JANUARY READING for Irish consumer sentiment was the strongest reading since February 2001.
The KBC Bank Ireland/ESRI consumer sentiment index rose to 110.4 in January from 103.2 in December.
The chief economist at KBC Bank Ireland, Austin Hughes, said while the survey clearly highlights stronger sentiment – it would be cautious not to overstate the significance of the 17 year high.
The results signal a marked improvement in confidence recently – rather than indicating that Irish consumers feel their circumstances are now better than at any time in the past 17 years.
Hughes said, “While the 17 year high reported in the January survey may exaggerate the extent of improvement being felt by most Irish consumers, the details of the survey point towards an encouraging easing in financial strains that should underpin household spending in the coming year.
The survey may not be signalling a return of the boom but it does suggest a marked easing in gloom.
Some 30% of consumers expect their own financial circumstances to improve in the year ahead. This is the largest number since September but similar to the average reading for the first quarter of last year. These results imply no dramatic uplift in consumer spending power for most Irish households.
Seasonal aspects
A more positive view of the general economic outlook also underpinned consumer thinking on the Irish jobs market.
The January results show 48% of consumers expect unemployment to fall further in the next twelve months, three times as many as envisage a rise in joblessness.
The largest monthly improvement in the January survey results was in relation to consumer thinking on Irish economic prospects.
Hughes said, “The sharp rise in sentiment in January partly reflects the continuing improvement in the Irish economy that now seems to be reaching more broadly across Irish consumers.
“Importantly, the jump in the survey is probably also driven by seasonal influences such as bargain hunting in post-Christmas sales and a pronounced tendency towards increased optimism in the early new year. Unfortunately, these seasonal aspects usually reverse in the February survey.”
The improvement in consumer sentiment in January was not unique to Ireland. While the comparable indicator for the US declined marginally, there were notable increases in confidence measures both for the Euro area which posted its best result since August 2000 and the UK which posted its largest monthly gain since September 2016.
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