Summer sales and holiday spending made households feel more optimistic last month with the KBC Bank/ESRI consumer sentiment index hitting its strongest level in over a year.
The latest reading of the index reached 105.1 in July, effectively unchanged from the previous month’s reading of 105. However, the marginal increase – which is not statistically significant – means last month’s results were the strongest since February 2016.
KBC Bank chief economist Austin Hughes described the latest reading as an "encouraging result". However, he warned the onset of back to school and other seasonal costs, coupled with efforts to downplay the scope for positive news in the upcoming budget means there may be weaker sentiment readings in the coming months.
The positive Irish sentiment reading for July contrasted with weaker results for comparable surveys elsewhere. Mr Hughes said this may be due to consumers here having braced themselves for more difficult economic times given the fallout from Brexit and the election of Donald Trump in the United States.
While consumers were confident about the general economic outlook, they were a little more cautious about their own personal finances than in previous months, according to the index.
“The details of the Irish sentiment survey for July show consumers are still cautious about their personal finances but a little more likely to spend. We think this is part of the ‘new normal’ for Irish consumers where there may be a willingness to hunt for bargains in the sales and to spend on travel but continuing pressure on household finances means the onus is very much on careful rather than conspicuous consumption,” said Mr Hughes.
