Consumer confidence took a hit in May

"Irish economic conditions are improving, this is not translating into broadly based and palpable gains in consumers’ financial circumstances"

Consumer confidence took a hit in May

A waiter gives back change in a cafe in Podgorica, Montenegro | Image: Darko Vojinovic / AP/Press Association Images

Consumer sentiment dipped in May as Brexit threats loom and income gains have been smaller than expected.

The fall was relatively small, moving from 102 in April to 100.5 in May, but it was the weakest reading of 2017.



Austin Hughes, Chief Economist, KBC Bank Ireland outlined some of the factors which caused the drop:

"The current level of the sentiment index suggests Irish consumers remain modestly optimistic but the lack of clear positive momentum in the survey strongly hints that the economic recovery is falling well short of consumers’ expectations in terms of delivering a material boost to their living standards."

He adds that this suggests that households are still struggling to realise the benefits of Ireland's economic recovery:

"The tone of the sentiment survey may be consistent with that of lacklustre income tax receipts or weakness in new car registrations.

"Together, these suggest that while Irish economic conditions are improving, this is not translating into broadly based and palpable gains in consumers’ financial circumstances. In turn, this means that sentiment and household spending lack a feel-good factor that would encourage sharper increases in these areas."

However, he also commented that we should not "exaggerate" the significance of this reading.

It will be interesting to see if this trend continues in the coming months.