Consumers Confident About Economy, But Household Finance Concerns Remain
Irish consumer sentiment improved in February on stronger expectations for activity and employment in 2021, as vaccine hopes, slowing virus numbers, and positive economic data and forecasts combined to encourage some sense of post-pandemic possibilities.
That's according to the KBC Bank Ireland consumer sentiment index, which increased to 70.8 in February from 64.9 in January, marking a 5.9 point gain that reversed some of 9.7 point drop seen between December and January that followed an unexpectedly sharp rise in the incidence of the coronavirus and a related ramping-up of health-related restrictions on economic activity.
The up and down pattern in monthly Irish consumer sentiment readings has been observed since June 202, with monthly changes in the index only moving successively in the same direction on one occasion during this period.
The unpredictability in the index highlights the difficulties Irish consumers face in making sense of their current circumstances and future prospects in rapidly changing health and economic circumstances.
The current level of the sentiment index still falls significantly short of the now twenty-five year average of the series, which stands at 86.9. As such, it is indicative of a nervous Irish consumer, a judgement further supported by more negative than positive responses to each of the survey’s five key questions.
Improvements in the survey this month came in the ‘macro’ aspects that focus on the general outlook for the Irish economy and the prospects for jobs, resilience in property prices, and a sharp pick-up in new building and house purchases of late.
Another important driver may be the large number and diverse sectoral and regional character of a wide range of job announcements made during the survey period.
The worry over household finances is strong, however, with only 18% of those reporting negative effects on their household finances expecting those impacts to end within six months, and a further 27% expecting an improvement to emerge only in the second half of the year.
The most common expectation, expressed by 30% of these respondents, is that negative impacts will take one to two years to end. A substantial further 10% see difficulties persisting for three to five years, with 5% of the view that the damage to their financial circumstances will be permanent.
© 2021 Checkout – your source for the latest Irish retail news. Article by Conor Farrelly. Click sign up to subscribe to Checkout.