Consumers more hopeful despite fear over Budget
CONSUMER confidence has risen despite Budget fears.
The index from KBC Bank/ ESRI shows consumers expect modest growth next year. The consumer sentiment index rose from 60.9 to 63.8 in November.
It was the second month in a row that confidence levels rose, after a sharp decline in September.
This was a surprise given that it comes ahead of this week's sixth austerity Budget.
People were cautious and cash-strapped, but appeared to be a little less fearful about what Budget 2013 may hold than seemed the case a couple of months ago, said KBC Bank economist Austin Hughes.
He said a key task for Michael Noonan was to sustain this improvement by ensuring that Irish people saw signs of progress, as well as pain.
Survey results indicated there was a slight improvement in how consumers assessed their personal finances.
Mr Hughes said this was due to falling inflation and tentative signs of the property market stabilising.
The better sentiment in Ireland mirrors that in US and UK but is at odds with the gloomier eurozone.
"If consumers wake up on Thursday morning feeling that Budget 2013 has made them much poorer than they expected, there is some risk that sentiment and spending could be on a weaker-than-expected trajectory in 2013," Mr Hughes said.
He said the near-term outlook may be better than envisaged if the Budget package could be presented in a manner that suggested the coming year would be difficult but bearable.
Another challenge for Mr Noonan will be to foster the view that the economy and household finances are slowly moving closer to a return to sustainable growth.
Trade body Retail Excellence Ireland welcomed the increase, but warned consumers were cautious. David Fitzsimons of Retail Excellence said the index indicated that consumers' financial situations may be improving slightly.
"However, consumers will remain cautious with spending throughout the next few weeks and it is only hoped that Budget 2013 will not be as harsh as expected."