CONSUMER SENTIMENT HAS shown a small and surprising increase ahead of Budget 2013, according to the KBC Bank Ireland/ESRI index.
The index rose 63.8 in November compared with 60.9 in October, which shows it has increased for a second month in a row compared with a sharp decline in September. The November figures compares to a reading in November of last year of 60.1.
The figures show that Irish consumers are cautious about their spending but they appear to be less fearful about Budget 2013 suggesting they expect modest growth next year.
Kevin Timoney of the ESRI, said the index shows an improvement in the consumption climate.
The main source of this month’s increase comes from the improved financial situation of households relative to 12 months previously. The average of the index over the past 12 months is below November’s level, at 61.0.
The details and delivery of Budget 2013 will make a big difference to the outcome of the index figures in the coming months. If consumers get a shock in terms of their spending power, this outlook could be a good deal weaker.
Austin Hughes, KBC Bank Ireland, noted:
The improvement in sentiment in November is encouraging. It remains the case that consumers feel Irish economic conditions will be difficult through 2013 and that household finances will remain under pressure. However, consumers seem to believe that a gradual improvement is taking hold. The key question is whether Budget 2013 will support or sink this fragile optimism.
The improved sentiment in Ireland reflects that in the US and the UK but is in contrast with the Eurozone, which posted the sixth monthly decline in a row to take this measure to its lowest level since May 2009.