Consumer confidence peaks in 23 months
Consumer confidence hit a 23-month high this month, according to KBC Bank’s latest consumer confidence index.
The index rose to 85.8 in May from 77.9 in April, as the incidence of the Covid-19 virus declined and the rollout of vaccination accelerated.
It is now at its highest level since June 2019, when it was 90.7, and is the 25-year series average of 86.8.
“These measures suggest that Irish consumers are increasingly focusing on a post-pandemic world and are starting to wonder what the ‘next normal’ might look like,” said Austin Hughes, chief economist at KBC Bank Ireland. by allaying concerns about employment and the general economic outlook, as well as heightened optimism about finances and household spending.
The index has seen an increase for four consecutive months, for the first time in more than five years, as Irish consumers believe the worst of the pandemic may be behind us, in terms of economic and financial risks.
The May survey saw the top five components of the Consumer Confidence Index post “significant gains” over their readings from the previous month.
The most marked improvement concerns employment.
“This was presumably motivated by the prospect of a return to work in a range of sectors where the May investigation period saw the announcement of an upcoming easing of health-related restrictions,” Mr. Hughes.
In addition, a steady stream of new job announcements continued, supporting expectations for a significantly brighter job outlook.
As a result, the employment component of the confidence survey experienced the first positive balance since June 2019.
The general economic outlook also improved significantly in May, with economic indicators and reviews remaining broadly positive.
“At the margin, growing concerns about the housing outlook may have constrained this element of the survey somewhat, but moderate gains in recent official house price and transaction data indicated a market currently in motion. recovery mode, ”Mr. Hughes said.
The May survey shows a clear easing of nervousness about household finances.
“It should be noted that Irish consumers remain relatively cautious about their personal financial situation, but May has seen a positive balance in the outlook for household finances over the next twelve months for the first time since May 2019” Mr. Hughes said.
According to the index, about one in six consumers expect their financial situation to improve in the coming year, compared to about one in eight who expect their financial situation to deteriorate.
On a more positive note, the spending component of the sentiment index is at its best since March 2020.
“Again, it can be noted that this result suggests a level of spending in the coming months that is healthy rather than white-hot,” Mr. Hughes said.