Relief for the retail sector as consumer sentiment improves
CONSUMERS believed the worst had already come -- at least before the IMF arrived.
The latest KBC Ireland /ESRI survey shows consumer sentiment stabilised and improved slightly during November.
While confidence remains at a very low ebb, this suggests consumers may already have "priced in" some bad news about the economy, KBC said.
But the survey was taken during the first two weeks of November -- before the IMF arrived to bail us out and full details of the next four years of austerity measures were revealed.
The KBC index showed consumer sentiment rising marginally from 48.1 in October to 48.4 last month, although the three-month average worsened from 50.0 to 49.6.
That means the poll for December will be very telling -- showing exactly how the IMF bailout and budget measures have affected the national mood, said survey analyst David Duffy of the Economic and Social Research Institute.
The November results are encouraging as well as surprising, said Austin Hughes of KBC Ireland, who noted the improvement could be a correction to the exceptional scale of deterioration during the autumn.
"They could also hint that even if Irish consumers remain very gloomy, confidence is not completely in freefall," he said.
"It will take another month or two of data to say whether Irish confidence is bottoming out but it could be that most people have already priced in a great deal of bad news about their future," he said.
"It could well be argued that greater clarity -- even if extremely painful -- helped rather than hurt the mood of Irish consumers," Mr Hughes added.
The low point in consumer confidence in the current recession came in July 2008 when the index dropped to 39.6 -- compared to a feelgood factor of 106.2 in early 2006 at the height of the bubble.
Although the mood improved earlier this year, confidence has taken a nosedive over the autumn as full details of Ireland's banking disaster and its fallout became apparent.
Consumers' perception of their future financial situation, the economic outlook and employment expectations improved slightly during November, a breakdown shows.
This might have been helped by a fall in the numbers on the Live Register for two months in a row, as well as strong performances on exports and industrial production, Mr Hughes said.
However peoples' perception of the economic situation remained almost unchanged.
IBEC's Retail Ireland said the new consumer sentiment figures were welcome as they showed the mood was stabilising and, along with the four-year plan, consumers would have even more certainty once the Budget was published.
"The level of precautionary saving in the economy has been exceptionally high. While consumers remain cautious there is some scope for the savings rate to fall as people gain certainty about their future incomes," said Retail Ireland's Torlach Denihan.