Ireland’s consumer sentiment dipped to 69 in Q3 2013, down one point on the previous quarter, however two points higher than the same quarter last year according to the latest figures from Nielsen, a leading global provider of information and insights.
Of the three components which make up the consumer confidence index only one has seen increased optimism on the previous quarter; people do feel job prospects have improved, however they are more negative this quarter in relation to their personal finances and readiness to spend.
Seventy percent of European markets reported consumer confidence increases with the most significant improvements in Portugal (55), Belgium (81), Spain (56), France (61) and UK (87) compared to Q2.
Positivity on job prospects, however not regarding personal finances
As unemployment rates in Ireland fall to their lowest levels in three years, the percentage of people who think job prospects are good or excellent increased to 17% (16% in Q2 2013). However there is slightly less optimism around personal finances. Those who feel their personal finances over the next twelve months are good or excellent falls from 34% in Q2 2013 to 29%. Furthermore, only 24% feel it is a good time to buy the things they need or want, compared to 26% in the previous quarter. It is worth bearing in mind that this research was conducted prior to the release of the 2014 Budget measures (announced in October 2013). This would be Ireland’s seventh austerity Budget.
Improved recessionary sentiment and general business conditions
While still significantly higher than the European average of 72%, 93% of respondents believe Ireland is still in a recession, that’s down two points on the previous quarter. Those that believe Ireland will be out of a recession in the next twelve months also improved from 10% in Q2 to 13% this quarter. There was also an improved view on general business conditions as 44% rated them as good/normal, up five points on Q2.
The cutting continues for Irish consumers …
Irish consumers continue to change their spending habits to save, with 81% of respondents saying they have done so compared to this time last year. This is the highest score of all European countries (joint highest position with Italy) and 21pts higher than the European average of 60% illustrating the strong reaction Irish consumers are continuing to have to their changed economic circumstances. Furthermore, there has been a significant increase in the percentage saying they have switched to cheaper grocery brands at 77%, a jump of eight percentage points. Again this is the highest of all European countries and twenty four percentage points higher than the European average of 53%.
SUMMARY: One small step back, however some positive indicators too
While the drop in consumer confidence is not significant this quarter, it does reflect the volatile sentiment which still exists among Irish consumers, even in the face of positive economic news for the country. However there is some good news to be taken from the latest data release, with more respondents feeling that job prospects and general business conditions are good, as reflected in falling unemployment rates and increasing business activity.
With the October budget figures released and at the lower end of the scale (an adjustment of €2.5bn. as opposed to €3.1bn.) it is hoped that the final quarter of 2013 will see certainty return for consumers as we head into the important Christmas shopping period. While consumers are expected to continue their cautious spending approach, it is hoped that with time the level of fear over job security and the future in general will decrease, allowing some savings to be released into the economy.