The pronounced “feel-bad” factor that has prevailed in the Irish economy since the crash has finally lifted, according to the latest KBC Bank Ireland/ESRI consumer sentiment survey.
The index for August, which rose modestly from 99.7 to 101.1 - suggests the upward trend of recent months persists even if consumers remain wary about the scale and sustainability of recovery.
The August reading was only the third time in 10 years that the monthly sentiment index exceeded 100.
However, the survey suggests consumers remain cautious about their household finances as they have done for several years.
The survey revealed three of the five elements of the index rose in August while two fell.
The 12-month outlook for the economy improved in line with strong growth figures and buoyant exchequer returns.
However, this was undercut by concerns about the global economy relating to Greece and recent developments in China.
Perhaps most surprising was the continued fall-off in sentiment surrounding the jobs market, which has occurred against of backdrop of positive jobs announcements.
“These results could be a statistical blip or they may reflect the absence of a follow-through from job gains to a widely felt rise in earnings that for most consumers would represent the clearest manifestation of an improving jobs market,” the reports’ authors said.
The survey’s findings in relation to household finance were mixed with consumers still reporting a weakening in their personal financial circumstances.
In contrast, consumers were a little more cautious about the prospects for their spending power in the year ahead than in July but the balance of responses is still modestly positive.
“Our sense is that consumers may be struggling to assess their personal financial prospects in circumstances where income growth is fairly modest and significant influences seem to be pulling in opposite directions,” the report said. “For example, notwithstanding a negative headline inflation rate, many Irish consumers are focussed on areas such as insurance, education and accommodation where substantial increases in living costs are being felt,” it added.
