Irish consumer sentiment dips amid uncertain outlook

Irish consumer sentiment weakened marginally last month amid the uncertain economic outlook.

The KBC Bank Ireland/ESRI consumer sentiment index fell from 102 to 100.5 in May.

KBC’s chief economist Austin Hughes also attributed the decline to ongoing concerns about personal finances.

Nonetheless, he said the current level of sentiment suggests Irish consumers remain modestly optimistic.

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However, he said the lack of a clear positive momentum in the survey strongly hints that the economic recovery is falling well short of consumers’ expectations in terms of delivering a material boost to their living standards.

The drop in sentiment here contrasted with gains in similar indicators elsewhere.

In the US, a fractional improvement was attributed to the optimism of president Donald Trump supporters.

In the Euro area, meanwhile, a modest monthly gain was driven by what Mr Hughes described as encouraging "macro" developments that more than offset a slightly more negative outlook for household finances.

This proved enough to push consumer confidence to its strongest level since July 2007, he said.

In the UK, an unexpected gain was linked to smaller-than-expected deterioration in household finances and possibly the general election.

In these other zones, Mr Hughes said consumers are reacting optimistically to relatively new developments. "In the case of Ireland, the survey suggests that optimism is fading," he said.

Irish consumer sentiment has dipped despite a sequence of generally positive indicators, which analysts have linked to increased concerns about a hard Brexit on foot of a vexed start to discussions on the exit process between the UK and its EU partners.

“In the same vein, inconsistencies in various recent US policy pronouncements emphasised the increased unpredictability of the global outlook,” Mr Hughes said.

“It may seem strange that Irish consumers are more sensitive to the risk of an economic setback than to the reality of relatively robust growth at present,” he said.