Consumer sentiment has weakened far more sharply in Dublin than elsewhere in Ireland of late according to the latest Irish Consumer Sentiment Survey released by KBC bank today.
The survey suggests a notably more pronounced drop in confidence in the capital compared to the rest of the country in the final quarter of 2016 which may reflect a number of factors. First of all, Dublin consumers may be more sensitive to uncertainty about the global economy than their counterparts in the rest of Ireland.
Second, the comparative resilience of consumer confidence outside Dublin could stem from a broadening and strengthening of domestic economic activity in the past year. Finally, the poorer Dublin reading in late 2016 could owe something to a greater incidence of economic difficulties such as pressure on accomodation in Dublin of late.
The Dublin consumer sentiment index fell to 137.8 from 150.1 in the previous three months. While sentiment also eased back in the rest of the country, the drop in the index was relatively modest to 151.5 from 154.2.
The drop in the past three months was the largest quarterly decline in confidence in four years in the indicator for the capital and pushed the Dublin consumer sentiment index to its weakest level since the end of 2014.
The mood of consumers in the rest of Ireland also dropped to its lowest reading in two years but the turnaround in the thinking of consumers in the capital has been much more dramatic of late.
Furthermore, consumer thinking on Irish economic prospects has been on a weakening trend for some time. Dublin consumers have been progressively downgrading their outlook since the summer of 2015 and their counterparts elsewhere in Ireland began to strike a more cautious tone early last year.
The scale of retracement has been broadly similar inside and outside the capital since this reassessment began but the deterioration in the final quarter of 2016 was notably sharper in Dublin than elsewhere.
The final quarter also saw a marginal weakening of the jobs outlook by consumers across the rest of Ireland and this came from a weaker initial starting point. However, the comparative resilience in this element of the survey outside the capital of late likely reflects the greater importance of domestic economic drivers to job prospects across much of regional Ireland.
According to Chief Economist at KBC Ireland, Austin Hughes, "This poorer assessment of late could be the product of two distinct sets of influences. First of all, the economy of the capital may be particularly sensitive to developments abroad and this could have translated into concerns about possible shifts in US economic policies under the Trump presidency as well as ongoing nervousness about the potential impact of Brexit on the Irish economy."
He added, "Second, there may also be some reassessment of the benefits and costs of the current economic upturn in the capital particularly in light of substantial pressures in areas such as housing."
Source: www.businessworld.ie
