Consumer sentiment weakens

 

Consumer sentiment weakened in July as people became a little more negative about their current finances and the future of the labour market.

The KBC Ireland/Economic and Social Research Institute index weakened to 66.2 last month, falling from 67.9 in June.

However, the overall index still remains above the 50 mark that separates expansion from contraction.

Last year, the index registered 49.5 in July, after a record low of 39.6 in the same month in 2008.

The index of current conditions slipped from 88.4 in June to 85.7 last month, while the expectations index also fell.

“The decline mainly reflects consumers becoming more concerned about their current household finances,” said the ESRI’s David Duffy.

“Consumers also have some concerns about the outlook. The expectations index weakened to 53.1 from 54.1 in June, on the back of a more negative view of the outlook by consumers for the economy and labour market over the next 12 months.”

Despite the fall, the report said the trend in sentiment still appears to be improving modestly. The three month moving average rose to 66.5 from 66.3, the highest reading since the end of 2007.

KBC Ireland's chief economist Austin Hughes said the weakening sentiment in July was not surprising following a stronger trend in recent months.

“The reality is that for most people conditions remain difficult and the future still looks uncertain. While the Irish economy may not be as weak as during 2009, there is little to spark a clear ‘feelgood factor’,” he said.

“So, at best sentiment and household spending seems likely to move in a pattern of two steps forward and one step back.”