Irish consumer sentiment recovered in July as sales, warm weather and the prospect of summer holidays appear to have boosted spirits, according to KBC Bank Ireland/ESRI Consumer Sentiment Index for July 2018.
The KBC Bank Ireland/ESRI consumer sentiment index rose to 107.6 in July from 102.1 in June, its best level since March.
Uncertain Global Economy
While the July reading is reflective of a generally positive outlook on the part of Irish consumers, the report noted that this is ‘coloured by a significant element of caution’.
“The improvement in Irish consumer sentiment in July was mainly driven by increased buying plans that were likely driven by summer sales, the new 18-2 car registration plate, and more general holiday-related spending,” said Austin Hughes, KBC Bank Ireland.
“While confidence has picked up as the Irish economy improved, an uncertain global economy and modest income gains mean Irish consumers are still careful about when and where they spend.”
The notable improvement in Irish consumer sentiment in July wasn’t mirrored elsewhere with Euro-area consumer confidence unchanged from the previous month.
The US consumer sentiment is slipping, it found, and the UK concerns over Brexit saw it’s consumer confidence fall to its weakest level since February.
“Consumers view’s on the future outlook have improved but at a more modest rate than their views on the current economic situation,” said Philip Economides, ESRI.
“This is likely a product of uncertainties such as Brexit and global trading conditions that are clouding the international outlook.”
Glass Half Full
All five elements of the Irish consumer sentiment index registered month-on-month gains in July, the first time this has happened since January. The largest change was in consumers’ perceptions of the buying climate.
This compression of spending plans gave a likely temporary boost to the sentiment index in July the report said, but added that, as in the past, the influence of this factor will reverse in coming months and could weigh on sentiment readings into the autumn.
The Index suggested that the ‘exceptionally fine weather’ exerted a positive influence on the mood of Irish consumers of late, however, it was not a key driver of the economic mood of consumers.
It suggested that the weather conditions may have caused more consumers to ‘see their economic glass as half full rather than half empty’.
“The jump in Irish consumer confidence in July was at odds with weaker readings in similar indicators for the US and UK,” Hughes continued.
“While the sentiment survey is driven by the economic temperature, our sense is that exceptionally warm weather may have caused more Irish consumers to see the glass half full rather than half empty in July. Unfortunately, this suggests the prospect of cooler sentiment and spending in coming months.”
© 2018 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click subscribe to sign up for the Checkout print edition.