Worries over jobs and oil dent consumer confidence

Concerns over the jobs market and oil prices made a dent in consumer confidence last month, according to new data released yesterday.

The Consumer Confidence Index, compiled by IIB Bank and the ESRI, registered 93.6 in August, down from 96.6 in July, when the index reached its highest level since January.

The fall was most marked in the expectations element of the index, which tracks consumers' optimism about the year ahead.

The expectations index fell back from 93.6 to 87, reversing a positive trend that had been in place for a year. The dip was mirrored in Bank of Ireland's Business Banking Index, which found 9 per cent fewer jobs were advertised in national newspapers last month than in August 2003.

On a three-month basis, however, the number of job advertisements was 6 per cent higher than in 2003. Bank of Ireland is expecting a positive trend to be underlined by a September bounce in job advertising.

IIB chief economist Mr Austin Hughes said the August decline in consumer sentiment was not surprising in light of the worries over oil prices that attracted attention early in the month.

He drew some comfort from the index of current economic conditions, however, noting an increase from 101 to 103.

This increase suggests that fears over energy prices did not cause consumers to rein in their spending habits last month, Mr Hughes said.

He believes increasing expectations of a stronger income growth in the run-up to the forthcoming budget should ensure that consumer sentiment ends the year on a strengthening trend.

"A very generous budget may be needed to deliver the sort of feelgood factor that would return consumer sentiment to the levels see during the Celtic Tiger era," he added.