Irish consumer sentiment hit a 15-year high last month with households feeling increasing confident about the future despite concerns over the global economy.
The KBC Bank Ireland/ESRI consumer sentiment index rose to 108.6 last month from a 10-year high of 103.9 in December, taking it to its strongest level since February 2001.
The improvement in sentiment was largely seen as being due to domestic developments as indicators for other economies showed noticeably weaker readings in January.
While Irish consumers expressed concern over the health of the global economy this was offset by optimism over the personal finances. This follows on from a rebound in the economy and the impact of changes made in last October’s Budget which came into effect at the end of January.
Views on prospects for the economy declined only fractionally last month. However, the January survey shows that 62 per cent of consumers envisage a stronger Irish economy in the next twelve months and only 13 per cent expect weaker conditions.
Healthier household finances are more widely expected this year with 38 per cent of consumers surveyed saying they expect their financial situation to improve in the next twelve months, as against 11 per cent who expected a deterioration in finances.
"While expectations for household finances are now at their strongest since the year 2000, this shouldn't be read as implying a surge in Irish households' spending power is now underway," said Austin Hughes, chief economist, KBC Bank Ireland.
The biggest weakening in the survey between December and January was seen in relation to jobs. While 49 per cent of survey respondents saw unemployment falling over the next year, some 21 per cent could see unemployment growing, up from 16 per cent in December.
"We can't fully explain why thinking on the Irish jobs market weakened last month. It could reflect concerns that the most threatening consequence of poorer global conditions would be felt in their impact on employment," said Mr Hughes.
