Hopeful signs for the domestic economy emerged today as Irish consumer sentiment bounced back to a 7-year high in July, the latest KBC Ireland/ESRI Consumer Sentiment Index showed.
The index increased to 89.4 in July, from 81.1 in June and up from 68.2 in July last year while the 3-month moving average rose to 83.3 in July, from 82.6 in June.
The increase was driven both by improving perceptions of the current economic environment and expectations for the future, according to David Byrne of the ESRI.
The index of current economic conditions rose to 103.5, from 95.8 in June. This is the highest level recorded since July 2006. Households were more positive about the current buying climate, which may, as in previous years, reflect at least in part the summer sales, he added.
Austin Hughes of KBC Bank Ireland said the solid increase in the sentiment index in July suggests confidence among Irish consumers is on a gradually improving trend.
"However, the 'choppy' nature of recent readings emphasises that the average consumer remains uncertain about the path the economy is on and is even more unsure as to whether any emerging upswing will deliver any significant improvement in their household finances," he said.
"We think a key reason for the volatility in the index of late is the extent of the disconnect between the generally good news consumers are hearing about the Irish economy and continuing pressures on their own personal finances. For many, this 'a recovery for other people' that they are hearing rather than feeling themselves. With debate intensifying about the scale of adjustment likely to be needed in Budget 2015, it isn't at all surprising that consumers remain nervous and any recovery in domestic spending remains tentative and uneven."