New data suggests that Irish consumer sentiment climbed to a fifteen year high in January as increasing optimism about household finances more than outweighed a slightly more cautious view of Irish economic prospects.
This is according to KBC Bank Ireland/ESRI Consumer Sentiment Index for January 2016 which was released yesterday. The index rose to 108.6 last month from 103.9 in December (which itself was a ten year high), taking it to its strongest level since February 2001.
Details of the January Irish sentiment survey suggests that Irish consumers were not blind to worries about the health of the global economy.
However, it appears these were more than offset by growing optimism in relation to their personal finances. A clear sense of caution in relation to the broad economic environment can be seen in a weakening in both elements of the survey that relate to ‘macro’ conditions compared to their December readings.
Sharply contrasting signals in relation to economic prospects may be weighing on consumer thinking but there is still considerable confidence that 2016 will be a good one for the Irish economy.
While marginally down on the corresponding data for December, the January survey still shows that 62% of consumers envisage a stronger Irish economy in the next twelve months and only 13% expect weaker conditions.
Chief Economist at KBC Bank Ireland, Austin Hughes says, "The improvement in Irish consumer sentiment in January seems largely due to domestic developments as comparable confidence measures for many other countries posted slightly weaker readings last month, as diagram 1 below indicates.
"A decline in US consumer sentiment from 92.6 to 92.0 effectively signals an unchanged level of confidence in the United States but the survey noted some concerns about weaker economic prospects as well as the decline in stock markets.
"It also seems that US consumers are somewhat concerned about the failure of what is now a relatively long lived recovery to deliver a marked improvement in the circumstances of the average consumer. Euro area consumer confidence also weakened modestly in January (from -5.7 to – 6.3) but this marked a notable departure from signs of improving sentiment in the two preceding months."