Consumer sentiment index signals 'easing in gloom'

Up to 30% of Irish consumers expect their financial circumstances to improve before the end of the year, according to the KBC/ESRI consumer sentiment index for January.

Economists say this is the largest number since September but as the figure is close to the average reading for the first quarter of last year, they imply no dramatic uplift in consumer spending power for most Irish households.

The index also shows that people are the most optimistic they have been since 2001.

The data also reveals that 56% of consumers see the Irish economy strengthening further in 2018, while 13% expect some deterioration.

Philip Economides of the ESRI said: “While there are often seasonal factors at play, Irish consumers undoubtedly entered 2018 in buoyant mood.. Strong annual growth rates in consumer sentiment have remained persistent over the last seven months and look likely to continue manifesting well into 2018.

"The broad-based nature of the improvement sentiment, which covers all indicators, bodes well for the 2018 spending outlook.”

Austin Hughes of KBC Bank Ireland said: "The sharp rise in sentiment in January partly reflects the continuing improvement in the Irish economy that now seems to be reaching more broadly across Irish consumers.

"Importantly, the jump in the survey is probably also driven by seasonal influences such as bargain hunting in post-Christmas sales and a pronounced tendency towards increased optimism in the early new year."

He added that these seasonal aspects usually reverse in February.

He added: "While the seventeen-year high reported in the January survey may exaggerate the extent of improvement being felt by most Irish consumers, the details of the survey point towards an encouraging easing in financial strains that should underpin household spending in the coming year. The survey may not be signalling a return of the boom but it does suggest a marked easing in gloom.”

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