Irish Consumer Sentiment 'Improved Solidly' For A Second Month In December
Irish consumer sentiment improved solidly for a second month in December, the latest KBC Bank consumer sentiment index shows.
According to the index, the survey period saw a declining trend in new coronavirus cases in Ireland and a related easing in domestic health-related restrictions that coincided with positive news on vaccines.
"Together with very positive Irish economic growth data and a continuing flow of new job announcements, this helped ease some of the concerns that have weighed on confidence and consumer spending through the past nine months," said Austin Hughes who co-conducted the survey.
'Two Opposing Influences'
Hughes noted that an important but limited number of consumers have suffered a significant deterioration in their financial circumstances because of the pandemic.
"These have been predominantly those workers on lower earnings and, at least in the near term, such losses have been significantly offset by wide-reaching fiscal supports," he said.
"In turn, this means that easing of restrictions hasn’t directly translated into a materially positive ‘income effect’ that would boost spending. Instead, the outlook for spending over Christmas and into early 2021 is likely to be determined by the relative strength of two opposing influences; the release of pent-up demand and the persistence of precautionary savings," Hughes added.
The December sentiment survey suggests that even though they are less fearful now than previously, Irish consumers are still overwhelmingly cautious about the outlook for their household finances in the year ahead.
Some 11% expect they will be better off in 2021 whereas 21% think they could be worse off, the research showed.
According to Hughes: "In the same vein, the buying climate was the element of the sentiment survey that saw the smallest monthly improvement in December. For these reasons, we think Christmas 2020 will see mixed rather than marvellous conditions for those firms catering to Irish consumers."
"That said, we would envisage some further modest trend rise in consumer spending in the final month of 2020," he added.
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