Ireland: Consumer sentiment drops in August
The KBC Bank Ireland/ESRI consumer sentiment index dropped to 102.4 points in August, down from July’s 107.6 points. The index, which moved further down towards the critical 100-point threshold reflects a downturn in sentiment across-the-board and marks a persistence in the “see-saw pattern” of stronger consumer confidence in one month followed by weaker confidence among consumers in the next month in a rapidly changing and uncertain economic setting due to Brexit. Uncertainty stemming from Brexit and growing trade war fears underpinned the decline in consumer sentiment.
August’s downturn in consumer confidence reflected a drop in every sub-component of the index compared to the previous month. Although losing some ground from the previous month, consumers remained optimistic in August about current economic conditions, and over their personal financial situation in the past 12 months and over the next year. On the other hand, consumers became more pessimistic on the outlook for both unemployment and the general economic situation. Consumers downgraded their assessment of the outlook for the wider Irish economy likely due to elevated uncertainty around Brexit, rising tensions from the U.S.–China trade war, and global tax policies.
Reflecting on the fall in consumer confidence in August, KBC Bank Ireland noted that:
“The August reading also hints that Irish consumers, like their counterparts in many other countries, may be increasingly concerned about the global economic outlook and the particular threats posed by Brexit and increased tensions around international trade.”