Consumers think worst of the crisis has passed
Published 12/01/2010 | 05:00
CONSUMERS are beginning to be less nervous about the future but they are still worried about their finances and the state of the economy, a new survey reveals.
The improved optimism here was in contrast with weaker readings for similar indicators in other European countries, as many remain gloomy about the economic outlook.
Sentiment among consumers improved slightly in December, when compared with the same month in 2008, as consumers ended the year in a cautious mood.
The KBC Bank/ESRI Consumer Sentiment Index slipped marginally last month to 53.3 from 53.6 in November.
But the index remained comfortably above the 50.2 reading recorded in December 2008.
It was the third month in a row in which consumer sentiment was steady.
The data appears to confirm a clear, if modest, improvement in confidence in recent months.
KBC Bank economist Austin Hughes said the spending power of households remained under pressure, but there were tentative signs that consumers believed the worst may be over for the economy.
However, he warned there was little expectation of a marked improvement anytime soon.
"Consumer sentiment is telling us that 2009 ended on a weak note, but a notably less awful note than it began," Mr Hughes said.
He added that the broad thrust of the index was that consumers felt the worst may be over for the economy.
But despite that, they expect household spending to be continued to be squeezed this year, while four out of five consumers think that unemployment will continue to rise.
The survey was carried out ahead of the severe Budget, which saw social welfare cuts, reductions in child benefit and another cut in public sector pay.
This meant it was hardly surprising that people were more pessimistic about their household finances in December compared with the previous month, Mr Hughes said.
"That said, it should be noted that the deterioration in these elements of the survey was not particularly sharp," the economist added.
David Duffy of the Economic and Social Research Institute said: "Consumer sentiment in December was modestly higher than the same month a year previously.
"Most of the improvement was in consumers' expectations for both the overall economy and the labour market," he added.
Meanwhile, worries about the economic outlook and the jobs situation are making Germans feel gloomy, while the French are pessimistic about their household finances.
In Britain, consumers fear they will be hit by tax rises.
Mr Hughes said: "The broad message coming from the December survey results is that Irish consumers may sense the worst is over for the Irish economy but they don't expect any dramatic improvement in the coming year.
"Although they remain cautious, they are notably less nervous than they were 12 months ago."