Ireland: Consumer sentiment continues to tumble in October
The KBC Bank Ireland/ESRI consumer sentiment index continued to tumble in October, falling to the lowest level in 46 months, on mounting risks of a hard Brexit. The index dropped to 93.5 in the month, down from 96.4 in September, moving further below the 100-point threshold that separates optimism from pessimism. September marked the first month since December 2016 that consumer confidence entered pessimistic territory and a departure from the nearly one-year long “see-saw pattern” of stronger consumer confidence in one month followed by weaker confidence among consumers in the next month.
Risks stemming from a hard Brexit, along with growing fears around a global slowdown, led consumers to downgrade their assessments on the current state of household finances and the general economic outlook. Moreover, respondents were more pessimistic about the future unemployment situation as fears grew over deteriorating economic conditions and by extension jobs cuts due to the likely adverse impact of a no-deal Brexit on the wider Irish economy. Therefore, consumers were more cautious about spending and cutting back, expressing less optimism for making big purchases. That said, households held slightly more favorable views on their personal financial over the next year, which could be attributed to measures in the 2019 budget—this was the only element of the index that showed any improvement.
Commenting on October’s downbeat reading, KBC Ireland noted:
“It seems that Irish consumers are now of the view that ‘winter is coming’ -and adjusting sentiment and spending plans accordingly […] The nature of the risks the Irish economy now faces means that it isn’t at all clear whether consumer thinking has adjusted too much or too little but the rapidly reducing Brexit timetable means consumer sentiment and spending could see further significant changes in one or other direction in the next couple of months.”