Consumer sentiment weakens in November

Consumer sentiment fell in November but stayed above the average for the last year, new data showed today.

The KBC Bank Ireland/ESRI Consumer Sentiment weakened to 60.1 in November, compared to a 16-month high of 63.7 in October. The average figure for the past 12 months was 55.4.

However, the current levels being recorded in the monthly index remain below the long term average of the series of 88, indicating that Irish consumers are aware of the enormity of the problems facing the economy and how that may impact on their personal financial situation.

The Index of Consumers Expectations, which looks at how consumers perceive their future financial situation and economic expectations, fell from 51.3 in October to 46.6 in November.

However, the Index of Current Economic Conditions, which reflects how consumers feel about their financial circumstance compared to 12 months ago, remained high at 80.1. The past 12 months recorded an average of 74.3, and October saw the index creep as high as 82.2.

Cormac O’Sullivan of the ESRI said consumer morale was being affected by the ongoing financial crisis.

“The surprise increase in the October figure has been reversed somewhat in November, although the index remains above the depressed levels seen over the past year,” he said.

He noted a fall last month in consumers’ expectations for the economy over the next 12 months. “This continues a pattern that has emerged over the past number of years of increased negativity in the run up to budget day,” he said.

However, Austin Hughes of KBC Ireland was not overly negative about the overall weakening in sentiment.

"What is encouraging is that the pullback was relatively limited," he said. "This hints that consumers have become a little less gloomy of late even though the sentiment index is still telling us they remain cash strapped and cautious. These results suggest Irish consumers may tolerate a budget package that imposes further pain provided it also points in the direction of an eventual recovery."