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Consumer mood brightens in January

Monday, February 11 12:24:23

Consumer sentiment improved significantly in January after December's slump thanks to the New Year sales but shoppers' moods are likely to dampen again this month, according to the latest KBC Ireland/ESRI Consumer Sentiment Index today.

The Index recovered from 49.8 in December to 64.2 in January. The 3-month moving average also increased from 58.1 to 59.3. The index rose above the average for the last 12 months (61.7).

Commenting on the results Kevin Timoney, ESRI, said consumer sentiment in January recovered strongly after December's large fall.

"Last year also began with an improvement of sentiment. Typically, sentiment improves in January, at least in part reflecting the winter sales, followed by a more subdued figure in February. We expect this pattern to continue and as a result some moderation might be anticipated next month. "Sentiment was much improved for every category. The most significant change related to expectations for unemployment, which improved to a level not seen since mid-2007. Expectations regarding unemployment have been improving over the course of the last 12 months," he said.

Austin Hughes, KBC Bank Ireland, noted that the recovery was not unexpected.

"After what seemed to be an exaggerated drop in the sentiment index in December, it was very likely that there would be a recovery in the January survey but the scale of the turnaround is better than might have been expected. Moreover, the details of the last month's survey suggest this wasn't a purely mechanical correction. The drop in December centred on concerns about the damage to household spending power from a range of measures in Budget 2013 whereas the improvement in January was most pronounced in consumers assessment of the outlook for the Irish economy in the coming year. So, positive economic data and increased hopes for a debt deal with Europe seem to have become the focal point of the January survey."