Irish consumer sentiment fell sharply in February on a notably poorer outlook for the Irish economy and jobs that translated into poorer household income prospects.
The scale of the deterioration in February seems unusually large and there could be some corrective rebound in the next month or two, KBC Bank Ireland/ESRI Consumer Sentiment Index for February 2019.
However, the February survey period did see a number of developments that may have unnerved many consumers and prompted an outsized drop in confidence. If this persists, we would expect consumer spending to move onto a weaker path.
‘No deal’ Brexit
Political developments in the UK from mid-January, when the British government’s plans were heavily defeated in parliament, appeared to notably increase the risk of a ‘no deal’ Brexit in a couple of months’ time.
"Some slippage in consumer sentiment was expected in February but the scale of decline was a surprise," Austin Hughes, KBC Bank Ireland, noted.
"It likely reflects growing fears that the UK could crash out of the EU in March following a series of votes in the British parliament during the survey period."
International Consumer Sentiment
Hughes highlighted that the fall in Irish consumer sentiment in February contrasted with modest gains in confidence indicators in the UK and US.
"We think UK consumers may be underestimating the prospective consequences of a ‘no deal’ Brexit." He added.
"In the US, sentiment recovered from a drop that was due at least in part to the recent government shutdown as well as nervous financial markets."
With the end of the nurses’ strike, improved hopes that a no deal Brexit may be avoided could prompt some improvement in Irish consumer sentiment in March.
© 2019 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click subscribe to sign up for the Checkout print edition.