Consumer confidence dips after New Year boost
Consumer confidence has fallen again after a surprise lift at the turn of the year, a high street survey revealed today.
Despite the slight turnaround after a lift during the January sales, experts suggested the sharp fall in spending over the last two years may be coming to an end.
The consumer sentiment index, compiled by KBC Ireland and the Economic and Social Research Institute, found shoppers remained extremely cautious last month as credit card bills arrived.
Austin Hughes, KBC Ireland, put much of the change down to the poorer buying climate after the sales.
"It was inevitable that consumers spending intentions would weaken once the sales ended and bills related to Christmas spending began to arrive," Mr Hughes said.
He claimed the buying climate was still stronger in February than at the end of last year.
"So, the sharp decline in Irish consumer spending may be coming to an end although the survey doesn't point towards any prospect of a dramatic rebound anytime soon," the banker said.
The index declined to 59.4 from the two-year high of 64.6 in January but is a huge way off the 14 year average of 91.8.
David Duffy, ESRI economist, said consumer sentiment had been expected to fall after the sales in January.
"In the past consumers have become more positive about purchasing major household items every January, reflecting, at least in part, the winter sales, followed by a more subdued figure in February," Mr Duffy said.
"This pattern has continued, contributing to the moderation in consumer sentiment.
"Although the decline in sentiment reflects in part a post-sales effect, it is noticeable that the decline is also driven by consumers becoming more negative in their perception of the outlook for the labour market and the economy."
The review said that the underlying trend in February suggested consumers may be less terrified but are strongly aware that economic conditions will remain very tough for the foreseeable future.
It also said consumers are realistic about prospects for 2010 and this may help them getting through a tough year.
Mr Hughes added: "So, Irish consumers are still fairly downbeat about the broad economic outlook and their personal finances. However, the underlying trend seems to be improving marginally.
"The message from the February report implies they still expect economic conditions to get better rather than worse in the coming year."