Irish consumer sentiment improved slightly in March, according to the latest KBC Bank Ireland/ESRI index, largely because of a slight easing of concerns about household finances.
The index rose to 101.9 in March, from 100.7 in February, only partly recovering the 2.4 point drop reported in the latter. However, the three-month moving average picked up for a third consecutive month and has now reversed the clear weakening seen through the second half of 2016.
However, there was little evidence that markedly more positive sentiment is becoming established, and a still-uncertain economic outlook means consumers remain relatively cautious, which was reflected in a marginal weakening of spending intentions.
Three of the five components of the Irish consumer sentiment survey posted stronger readings in March than in February. However, the March survey also saw a modest pull-back in spending intentions, reflecting a continuing caution that is undoubtedly informed by an uncertain economic outlook. Consumers’ assessments of the broad outlook for the Irish economy were modestly stronger in March than in February but the gains entirely reflected an easing in negative views.
The report noted that the improvement in Irish consumer sentiment in March mirrored stronger readings in comparable US indicators of late, but was at odds with the first weakening in Euro area sentiment in six months. It said this could be due to ‘event risks’ such as elections in several countries, renewed concerns about Greek debt prospects, and ongoing worries about Italian economic and financial frailties. The divergent trends in global sentiment indicators in March contrasted with more uniform readings in February, highlighting the variable degrees of influence that domestic and global factors are having in framing consumers’ views of the economic and financial outlook both in Ireland and elsewhere at present.
The report said the major influence on Irish consumer sentiment in the next couple of months could be the tone of initial Brexit negotiations and the extent to which a conciliatory or hostile note eases or amplifies concerns about the consequences for the Irish economy.