Consumer sentiment rose sharply in July, reaching its highest level in almost two years as concerns about the general economic outlook abated.
The overall KBC Ireland/ESRI consumer sentiment index measured 67.7 in July, up from 62.3 in June. That brings it to six months out of seven that the increased this year.
The overall index has two parts - an index of consumer expectation, which looks at consumers’ outlook for the ext year, and an index that focuses on the current situation.
The Index of Consumers Expectations, which takes into account the perception of future financial situations and employment expectations, rose last month from 49.5 in June to 56.3. Eddie Casey of the ESRI said it had edged slightly higher than levels recorded in any month since November 2007.
The index measuring current economic conditions rose from 81.4 in June to 84.7 in July, the highest reading in two years.
But although the overall index is measuring at its highest level since June 2010, it is still below the historical average of 86.8.
KBC Bank Ireland’s Austin Hughes said the rise did not necessarily represent a sea-change in the economic circumstances facing Irish consumers, but built on “a modest and gradual improvement in confidence”.
“The July survey results are surprisingly strong and probably reflect the coincidence of a number of favourable developments during the survey period,” he said.
“Significantly, the change in the sentiment index was driven primarily by decline in negative responses rather than a surge in positive responses. So, it points to an easing in fears rather than a surge in optimism. In turn, this suggests consumers are likely to remain cautions and so, spending is likely to remain subdued.”
