Significant improvement in consumer sentiment in April

April 28, 2023

Consumer sentiment has improved significantly this month as negativity about the economy and household finances subsided, new data has found.The Credit Union Consumer Sentiment Index rose to its best level in 13 months, reversing the 1.7-point decline seen between February and March.Author of the commentary, economist Austin Hughes, said the rise means a clear if constrained trend recovery in Irish consumer sentiment that began last Autumn is still firmly in place.But he also cautioned that the upward movement was more a result of people’s fears easing, rather than any great optimism about an improvement in conditions and any recovery has some distance to go.”Encouraging as the April sentiment reading is, it still suggests the current mood of the Irish consumer is dominated by uncertainty and caution,” he said.”Although fears of a full economic or financial meltdown may be fading, many consumers still face significant uncertainty and substantial financial strains.”Easter and the anniversary of the Good Friday Agreement may also have provided something of a boost and break from normal reporting, which had tended to be worrisome when it came to the economy and finance, he added.The index found that all five main elements gained in April compared to March.”The largest improvement related to the outlook for employment,” said Mr Hughes.”To a significant extent, this mirrors the resilience of the Irish jobs market to both the global economic step-down following from the war in Ukraine and, more recently to high profile tech sector job cuts.”The research, carried out with Core Research, also found that consumer attitudes to the broader outlook for the economy also recovered, although the increase there was the smallest of the five parts.”As noted previously, the fact that consumer prices are still rising rapidly means that cost-of-living pressures are continuing to increase rather than ease,” Mr Hughes said.”It is also case that much of the focus in relation to fiscal matters concentrated on exceptional corporation tax receipts in a manner that could be misconstrued as suggesting serious problems rather than significant opportunity.””So, it is not entirely surprising that economic ‘feelgood’ is still in short supply among Irish consumers.”The research also asked a special question about households’ capacity to weather a financial emergency.It found there has been a clear increase in the proportion of consumers who feel they are in a position to cope with ease with a financial emergency, from 12% a year ago to 14% today.”The most common response given by some 44% of consumers was that would handle such an emergency by drawing on their savings,” Mr Hughes explained.”As 34% of consumers indicated they would draw on savings when asked the same question in the 2022 survey, this suggests a significant build-up in ‘precautionary savings by Irish households of late.”But there was also a sharp increase to 17% this year from 7% in 2022 in the number of consumers who say they couldn’t handle such an expense through any funds or financial capacity available to them at present.

Article Source: Significant improvement in consumer sentiment in April – Will Goodbody- RTE

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