The latest KBC Bank Ireland/ESRI Dublin consumer sentiment index has been released today as part of the ‘Dublin Economic Monitor’ by the four Dublin local authorities.
The index shows that Dublin consumer sentiment weakened modestly in the second quarter of 2016, but the drop in confidence was slightly more pronounced in the capital than across the rest of the country and driven by slightly different factors.
It is believed that the slightly larger correction in the Dublin sentiment reading may reflect a correction following a comparatively strong reading in the previous quarter and sentiment has tended to follow a broadly similar trend inside and outside the capital in recent years.
However, the details of the two indices hint that the mood of consumers in Dublin was driven by somewhat different factors than those of most concern to consumers elsewhere in recent months.
The most notable divergence in recent years between these two ‘regional’ sentiment indices has related to consumers’ assessment of the jobs market.
While official data show a broadly based improvement in numbers at work, this survey suggests a strong sense of altogether more buoyant job market conditions in the capital in recent years.
In the second quarter of 2016, the two indices moved in opposite directions that also contrasted somewhat with their recent trends.
The negative Dublin jobs reading reflected a number of elements according to the report. First, it may owe something to increasing uncertainty about the global economic environment and greater perceived threats to job prospects in the shape of a range of downside risks including that of Brexit-although the survey was concluded before the outcome of the UK referendum on membership of the EU was known.
To the extent that the Dublin jobs market is more closely connected to global conditions, this might have prompted increased concerns on the part of Dublin consumers just as signs of healthier domestic demand appeared to support the prospect of healthier hiring conditions elsewhere in Ireland.
The report suggests this might explain some element of the divergence in consumer thinking on job prospects.
According to the report, "We think a couple of specific developments likely also played some role in the weaker Dublin jobs reading in the second quarter. As was seen in Q3 2015, the announcement of the closure of Clery’s coincided with a sharp drop in the jobs element of the Dublin sentiment survey, suggesting a particular sensitivity to bad news on the jobs front that might hint at a greater sense of precariousness in relation to employment."
They added, "One development was the announcement of proposed job cuts at Intel. Although the location of Intel’s operations might mean that technically, these jobs could be considered to be outside Dublin, their proximity to the capital and the broader focus on multinational operations in the greater Dublin area means this news might be expected to resonate more with Dublin consumers.
In addition, the survey period saw a high profile industrial relations dispute at Luas that may have prompted some Dublin consumers to downgrade their assessment of the outlook for the jobs market in Dublin."
Source: www.businessworld.ie
