Consumer Confidence Hits Two-Year High In Ireland

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Irish consumer sentiment continued to improve in June as the economy slowly reopened after the latest Covid-19 lockdown.

While the monthly reading for the KBC Bank consumer sentiment index of 87.2 is only marginally higher than the May figure of 85.8, the increase was sufficient to push Irish consumer confidence to a two-year high. The June reading also pushes the sentiment index back in line with the 25-year average of 86.8.

“It could be argued that sentiment has now normalised,” said Austin Hughes, KBC Ireland’s Chief Economist.

He stated that the results suggest that Irish consumers are becoming less concerned about their current circumstances and less fearful about the future.

Four of the five main elements of the KBC Bank sentiment survey posted relatively modest gains in June compared to their May readings. “That seems consistent with the view that June marks a further incremental improvement in the mood of Irish consumers rather than any dramatic change in their thinking,” said Hughes.

The re-opening of the economy did contribute to a clear easing in nervousness about the general outlook for the Irish economy in June. The survey shows that this element registered its best reading since November 2018.

However, given the long-lasting concerns about Brexit, the May survey shows negative views on the economic outlook still slightly exceeding positive views. “So, while the June survey suggests brighter days ahead, it does not seem consumers see entirely cloud-free economic skies,” said Hughes.

In terms of personal finances, consumers had a less negative outlook in June. “This probably reflects the resilience of household incomes which, in turn, likely owes much directly and indirectly to the maintenance of major fiscal supports through this period,” explained Hughes.

However, the survey shows a limited uptick in purchasing plans, which Hughes said suggests consumer spending will “bloom” rather than “boom” this summer.

Overall, the survey shows that Irish consumers are more optimistic about the future, although housing and rising living costs remain the biggest threats to the post-pandemic Irish economy.

“An inadequate supply of housing was cited as the most significant potential concern facing the Irish economy by 17% of consumers surveyed. The second most prominent concern relates to rising living costs which was cited by 16% of consumers,” said Hughes.

NAM Implications:
  • Consumer confidence is high but modest…
  • Key will be government speed and efficiency in:
    • Correcting inadequate supply of housing.
    • And controlling rising living costs

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