Ireland: July's fall in consumer confidence softer than expected after Brexit vote
August 3, 2016
In July, the KBC Bank Ireland/ESRI Consumer Sentiment Index dropped from 103.4 points in June to 99.6 points. July’s reading came on the back of a decline in four of the seven components of the index and is the first survey to analyze the impact of Brexit on Irish consumer confidence. That said, the report stated that July’s drop was smaller than expected and that the result reflected “sharp divergence within survey components”.
July’s reading reflects that Irish consumers had a more pessimistic outlook on the Irish economy, which dropped to an almost-three-year low. Employment prospects also declined sharply and reached their lowest level in over one year. Irish consumers, however, were more optimistic about current economic conditions and were more willing to purchase big ticket items. The survey stated that the upbeat assessment could potentially reflect the onset of summer sales and holidays.
KBC also stated that, “the apparent disconnect in the July sentiment survey between a marked downgrading of the general economic outlook and an improvement in the buying climate is unlikely to be sustained. Whether a renewed convergence in the various elements of the sentiment survey comes about because clear evidence of weaker ‘macro’ conditions prompts a downgrading of the outlook for household finances or the factors now seen supporting household spending are deemed sufficiently entrenched to lead to a renewed upgrade to the ‘macro’ outlook is still unclear.”