CONSUMERS were more optimistic last month about the future prospects of the economy, according to new figures.
Worries about job losses have eased a little despite a continuing rise in unemployment, and people are becoming a little less fearful about their personal finances.
The tentative new optimism was reflected in the KBC Bank/ESRI Consumer Sentiment Index improving to 59.4 from 57.9 in April, reversing a fall registered a month earlier. It was the fourth rise in the past five months.
Consumers are still fairly gloomy overall, but they are starting to adjust to the harsh economic conditions, KBC Bank economist Austin Hughes said.
"The May sentiment survey results suggest confidence is gradually building among Irish consumers that they can adapt successfully to relatively tough economic prospects," he said.
Optimism about future economic prospects has surged, according to a consumer expectations sub-index, which improved from 42.3 to 50.8.
A second sub-index that measures perceptions of conditions fell from 81 to 72.1.
KBC said there was evidence that consumers remained sluggish in spending their build-up of savings, but they appeared to be getting used to the "new normal" situation of low growth.
"Consumers appear to be drawing comfort from the absence of regular negative surprises that were a feature of the economy through the past couple of years," Mr Hughes said.
Most of the news shocks for the domestic banks appear to have passed.
"That is not to say recent news has been particularly good. However, it doesn't seem to have been quite as bad as Irish consumers expected or feared," he added.
The survey shows that the buying climate is still weak as spending power remains restrained.
Mr Hughes said there may be an element of curtailed purchasing ahead of summer holidays and summer sales.
These responses emphasise the problems facing retailers. They also suggest household spending will remain relatively subdued in the coming months, KBC Bank said.