Sunday 25 September 2016

Consumer confidence increases as 'feel-bad' mood begins to lift

Published 03/09/2015 | 02:30

The trend in household finances in the past year was judged a little more favourably than in July
The trend in household finances in the past year was judged a little more favourably than in July

The "feel-bad" mood is starting to lift for consumers.

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New figures show consumers recovered their confidence about the economy last month, but remain cautious about household finances.

The index that measures consumer sentiment went above 100 in August, only the third time in 10 years it has hit that level.

But global economic upheaval means that consumers are also wary about their prospects, according to the KBC/Economic and Social Research Institute index.

The index increased to 101.1 in August from 99.7 in July. The index had fallen in June.

The rise in sentiment reflects the broadening recovery in the economy, said KBC Bank economist Austin Hughes.

"It is clearly the case that the pronounced 'feel-bad' factor that prevailed through the recent crisis has now faded," he said.

He added, however, that the relatively modest and random monthly changes in the index suggest consumers are not seeing a dramatic improvement in their financial circumstances.

Continuing concerns about the outlook for the Greek economy coupled with increasing nervousness about developments in China may be prompting significant uncertainty about the health of the global economy, Mr Hughes said.

But he added: "It should be emphasised that these concerns aren't widely seen as threatening the current upturn."

The trend in household finances in the past year was judged a little more favourably than in July. On balance, consumers report a weakening in their personal finances.

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," Mr Hughes said.

The headline inflation rate may be negative, but many Irish consumers were focused on insurance, education and accommodation where substantial increases in living costs were being felt.

This means the end of downturn is not automatically translating into a "feel-good" factor because of ongoing strains on the financial circumstances of many consumers.

Irish Independent

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