Ireland: Consumer confidence drops sharply in May
June 9, 2014
The KBC Bank Ireland/ESRI Consumer Sentiment Index dropped 7.8 points over the previous month to reach 79.4 points in May. April’s result had marked the highest point since January 2007. According to the survey report, while the impact of recovery has been uneven and many households are still under pressure, the magnitude of May’s drop in sentiment is somewhat surprising.
The report acknowledges that the survey might, “reflect statistical ‘noise’ rather than a fundamental change in economic circumstances. This could have played some role in the May reading but we also think the election campaign and concerns about water charges and medical cards may have caused consumers to take a gloomier view. Through the survey period there was an intense focus on financial and economic strains that had been evident, albeit to a lesser degree, in previous surveys. Our sense is that this debate amplified consumer worries and prompted a sharp drop in confidence.”
The current economic conditions index decreased in May, with consumers expressing concern regarding their current financial situations and their ability to purchase durable goods. Meanwhile, the consumer expectations index also registered an important decline over the previous month. Consumers were less optimistic about improvements in the labor market as well as the state of the general economy over the next 12 months.
Author: Carl Kelly, Economist