Consumer confidence is at a two year high, according to the latest KBC Bank Ireland consumer sentiment index.
While the monthly reading of 87.2 for June is only marginally higher than the May figure of 85.8, the increase was enough to push confidence to a 24 month high.
The reading for this month pushes the sentiment index back in line with the 25 year average of 86.8.
“It could be argued that sentiment has now normalised,” said KBC Ireland’s chief economist Austin Hughes.
Mr Hughes said these results suggest that Irish consumers are becoming less concerned about their current circumstances and less fearful about the future.
“This is further suggested by the fact that June marks the fifth successive monthly increase in the KBC Bank consumer sentiment index-the first time that has happened since the beginning of 2007,” he pointed out.
Four of the five main elements of the KBC Bank sentiment survey posted relatively modest gains in June relative to their May readings.
“That seems consistent with the view that June marks a further incremental improvement in the mood of Irish consumers rather than any dramatic change in their thinking,” said Mr Hughes.
The re-opening of the economy did contribute to a clear easing in nervousness about the general outlook for the Irish economy in June.
The survey shows that this element registered its best reading since November 2018.
However, given the long-lasting concerns about Brexit, the May survey shows negative views on the economic outlook still slightly exceeding positive views.
“So, while the June survey suggests brighter days ahead, it does not seem consumers see entirely cloud-free economic skies,” Mr Hughes said.
The survey shows that there was a marginal improvement in the outlook on the jobs market in June.
However, Mr Hughes said that with many returning to work as the economy begins to reopen, a larger uptick might have been expected.
But he said concerns about ‘scarring’ impacts on the employment prospects of those in areas not yet opening may have dampened this element.
“It should also be noted that, in contrast to the broader economic outlook, the past two months have seen a move into a net positive balance of responses to this question, pointing towards some easing in unemployment over the next two months, the first time this has been seen since mid-2019,” he said.
In terms of personal finances, the survey shows that consumers had a less negative outlook in June.
“This probably reflects the resilience of household incomes which, in turn, likely owes much directly and indirectly to the maintenance of major fiscal supports through this period,” explained Mr Hughes.
The survey shows a limited uptick in purchasing plans, which Mr Hughes said suggests consumer spending will “bloom” rather than “boom” this summer.
Overall, the survey suggests that Irish consumers are more optimistic about the future, however it suggests that housing and rising living costs will be the biggest threats to the post-pandemic Irish economy.
“An inadequate supply of housing, was cited as the most significant potential concern facing the Irish economy by 17% of consumers surveyed.
“The second most prominent concern relates to rising living costs which was cited by 16% of consumers,” said Mr Hughes.