Consumer sentiment creeps higher in April

Consumer sentiment inched higher in April, breaking a run of declines since January’s 15-year high.

But the index showed households were remained cautious, with sentiment failing to recover more than half the decline recorded in March.

The KBC Bank/ESRI Consumer Sentiment Index rose a little over two points to 102.7 in April, with the three-month moving average of the series also showing a two-point decline. The improvement in sentiment follows the largest monthly drop in 17 months in March.

"The fractional rise in the index in April shouldn't be interpreted as signalling a notable change for the better, but it does suggest that Irish consumers are not gripped by a newly returned pessimism," said Austin Hughes, chief economist with KBC Bank Ireland. "Instead, the mixed results of recent months suggest many consumers are struggling to make sense of an unclear economic environment."

Part of the issue stems from uncertainty over the international outlook, fuelled by Brexit and other factors, which is being partially offset by the more upbeat news on the Irish economy. Households, meanwhile, are feeling the benefit of low interest rates from the ECB.

“The survey suggests consumers are in wait and see mode as they try to assess which set of forces is likely to determine their fortunes in the coming year.,” said Mr Hughes. “Global concerns ranging from ‘Brexit’ to worries about China and the health of financial markets have coincided with a more uncertain domestic political outlook. However, Irish consumer sentiment was helped recently by a range of positive commentaries on domestic economic prospects and actions by the ECB that suggest the prospect of an extended period of low interest rates.”

The overall shift in the index compared with a modest rise in the euro area for the month and a fourth fall in a row for UK consumer confidence in April.

The index of consumer expectations rose to 92.9 from 91.2 a month earlier as consumers viewed future employment prospects more positively, and the general economic climate improved.

Consumers were also more positive about the buying climate, with rise of a 3.8 index points in the component asking people whether it was a good time to make large household purchases and contributing to a jump from 114.5 in March to 117.3 in the index of current economic conditions.