Consumer confidence in the economy has plunged to a four-year low as worries about the outlook for jobs, the housing market and soaring oil prices intensified last month.
As the Central Statistics Office (CSO) published figures showing another increase in the number of people claiming unemployment benefits in October, the consumer sentiment index for last month, compiled by IIB Bank and the Economic and Social Research Institute (ESRI), slipped to its lowest level since October 2003.
Fewer than one in 10 consumers have a positive view of the economic outlook for the next 12 months, according to ESRI economist David Duffy.
IIB Bank chief economist Austin Hughes said fears for the future of the Irish housing market were the main reason for the deterioration in consumer confidence, which has been on a downward path since the beginning of 2006.
"Even though new job announcements substantially outnumbered layoffs in the survey period, consumers are worried that a weaker housing market will spill over into more broadly based problems in the jobs market," Mr Hughes said.
Layoffs announced during the period included those at Intel and Tyco, but there were also a spate of significant job creation plans at Mellon Bank and Dunnes Stores, as well as significant increases in employment at Rigney Dolphin, Enfer, Park Academy, Nortel and Postbank.
The overall consumer sentiment index reading of 71.8 was also dragged down because fewer consumers said they would buy big ticket items such as white goods and furniture in October.
Mr Hughes said this reflected a dampening of demand due to the weaker housing market, concerns about oil prices and an increasing tendency among consumers to make only major purchases when prices are discounted in the sales.
Although consumers were gloomy about the economic climate, outlook and state of their personal finances, they were more optimistic about their expectations for their household finances for the next 12 months.
Mr Hughes said this modest improvement in consumer confidence in their own spending power reflected the belief that the worst news on interest rates may well be behind them.
There was little doubt that eight interest rate hikes by the European Central Bank had squeezed consumers' spending power, Mr Hughes added.
Meanwhile, the seasonally adjusted live register, which measures the number of people receiving the jobseekers benefit and allowance payments, rose slightly by 500 people to 164,700.
Although the register also includes some part-time and casual workers, the increase in claimants pushed up the CSO's estimate of the rate of unemployment to 4.8 per cent, up from 4.7 per cent in September.
The number of people on the live register is at a three-year high. The Government estimates that the unemployment rate will rise to 5.5 per cent next year, largely as a result of job losses in the housing sector.
