Ireland: Consumer sentiment falls to 13-month low in June amid escalating global uncertainties
The KBC Bank Ireland/ESRI consumer sentiment index dropped to a 13-month low of 102.1 points in June, down from 106.7 points in May, amid a tenser global backdrop. While sentiment weakened in June, it remains above the critical 100-point threshold, reflecting a largely optimistic mood among consumers. June’s decline marks a persistence in the “see-saw pattern” of weaker consumer confidence in one month followed by stronger confidence among consumers in the next month in a rapidly changing and uncertain economic setting due to Brexit.
The downturn in consumer confidence in June was underpinned by less favorable readings in all five main sub-components of the index compared to the previous month. Views over personal financial situation in the past 12 months and in the next 12 months were less optimistic, with higher fuel and housing costs, coupled with subdued wage growth weighing on spending capacity. Despite more upbeat job market data in June, consumers were more pessimistic about employment prospects amid a more turbulent global setting, which weakened more than perceptions over the general economic outlook, which remained downbeat. Consumers also showed a lower propensity to make major purchases, although it remained the strongest sub-component of the index.
Reflecting on the downturn in consumer confidence in May, KBC Bank Ireland noted that:
“While this clearly points towards weakening confidence, we don’t think it suggests the average Irish consumer has experienced any dramatic worsening in their economic circumstances of late. Instead, the poorer sentiment reading for June likely emphasizes how fragile confidence and the financial circumstances of many Irish consumers remain even after several years of strong recovery in activity and employment in the Irish economy.”