Consumers optimistic in Ireland

Irish consumers remained cautiously optimistic in August despite a wave of global turmoil that hit consumer sentiment in the United States and Europe.

The KBC Ireland/ESRI Consumer Sentiment Index stood at 55.8 in August, a touch below the 55.9 registered in July but well below a two and a half year high of 67.9 reached in June last year.

While perceptions of current conditions worsened, optimism about the future improved, the survey showed.

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“The August sentiment reading also hints that some consumers are finding a silver lining in dark economic clouds,” said Austin Hughes, chief economist with KBC Bank.

“The reduced threat of further (European Central Bank) interest rate increases and a softening in oil prices seems to have helped sentiment,” he said.

Ireland is meeting the fiscal targets of its EU/IMF bailout but Finance Minister Michael Noonan has admitted that a deepening of the European debt crisis and spluttering US growth could bring the export-reliant economy back into difficulty.

US consumer confidence plunged in August to its lowest since the 2007-2009 recession. German consumer sentiment fell to a 10-month low going into September, while confidence among British consumers fell to its lowest level in four months in August.

The unchanged Irish index might seem to suggest Irish consumers are either remarkably sanguine or stupid,” KBC and the ESRI said in a joint statement. “However, Irish consumers hadn’t upgraded their expectations anything like their US or euro zone counterparts in the past couple of years.”

A gloomier global outlook may necessitate more pain in December’s budget for next year.