Consumer Sentiment Falls in February

Irish consumers a little more cautious in February

The overall KBC Ireland/ESRI Consumer Sentiment Index decreased in February to 96.1 from 101.1 in January. The 3-month moving average increased from 92.3 in January to 95.9 in February.

Commenting on the results Ciara Morley, ESRI, said
· “ As expected sentiment for February is subdued compared to that recorded in January following the Christmas sales. The 3-month moving average however, which removes some of the monthly volatility, is showing a continued upward trend in consumer sentiment from 92.3 in January to 95.9 in February.”

· “Although the decline in consumer sentiment reflects in part a post-sales effect, it is noticeable that the decline is also driven by consumers becoming more cautious about how they perceive their future financial situation. Despite reductions this month in four of the five indicators underlying the sentiment, consumers are feeling more positive now than they did at the end of 2014 and even more so when compared to this time 12 months ago. Consumers also continue to maintain a positive outlook for unemployment this month.”

· “The Index of Consumer Expectations decreased to 88.6 this month, from 93.2 in January. The Index of Current Economic Conditions, based on how consumers feel about their current financial circumstance compared to 12 months ago, as well as their perception of the current buying environment for large household purchases also decreased from 112.8 in January to 107.2 in February.”

In addition, Austin Hughes, KBC Bank Ireland, noted:
· “The pullback in consumer sentiment in February from January’s nine month high is disappointing but not entirely unexpected. Most Irish consumers are not experiencing a ‘straight line recovery’ where each month sees a clear and progressive improvement in their personal circumstances. In addition, the broader global outlook remains quite uncertain and through the survey period renewed concerns about Greece would have been a forceful reminder of downside risks to macroeconomic prospects. So, while our sense is that the underlying trend in Irish consumer sentiment remains solidly positive, the monthly index is likely to continue to make progress by taking two steps forward followed by one back.”

· “Four of the five main elements of the survey were weaker than in January. The exception was the employment component that benefitted from a string of job announcements and a further drop in unemployment during the survey period. While the buying climate did correct marginally, it remains at levels that hint at some increased inclination to spend through 2015. Disappointingly, after January saw consumers report the first positive outlook for their personal finances since mid-2007, the February index saw a return to a marginally negative outturn. This suggests we are not yet at a point where consumers are fully confident that an improving Irish economy will automatically translate into an improvement in their household finances.”