Consumer sentiment improved in May for the second consecutive month to reach its highest level since July 2001, according to the IIB Bank/ESRI index. A level of 92.4 was recorded for May, up from 91.7 for April but still well below the July 2001 level of 96.9.
A breakdown of the components of the May index showed households' assessment of current conditions improved - up to 105.3 from 100.5 - but their expectations on the future weakened to 83.8 from 85.8.
The latest index suggests the low point in the recent economic downturn has passed but the scale of the rise does not suggest anything other than a modest upswing in spending in the months ahead, according to IIB economist Mr Austin Hughes.
"Of course, more World Cup results like today's could give sentiment a big boost in the months ahead," he added.
The improvement in sentiment for a second month suggested that the fears of an economic meltdown that hit confidence in the early part of the year had disappeared, Mr Hughes suggested.
"We would expect the end of that 'shock' to encourage some improvement in consumer spending from the disappointing trend seen in recent months. That said, the current conditions reading remains well below the levels seen in the past few years. So, any upswing is unlikely to be spectacular," Mr Hughes said.
While sentiment is stronger, there is a rise in the number of consumers expecting unemployment to increase over the next 12 months.
