DUBLIN (Reuters) - Irish consumer sentiment dipped in December to its lowest level since early 2015, a survey showed on Tuesday, as households ended the year feeling increasingly nervous.
Ireland’s economy finished 2016 on a high as data suggested it would outgrow the rest of the euro zone for the third year running. But that has failed to buoy consumers, many of whom are experiencing an uneven recovery that has not fully restored the losses endured in the financial crisis of nearly a decade ago.
Their cautiousness helped push back the KBC Bank Ireland/ESRI Consumer Sentiment Index to 96.2 from 97.8 in November. The index has slid from a 15-year high of 108.6 hit at the start of last year.
“The main message coming from the sentiment survey through 2016 appears to be that, from the perspective of the average Irish consumer, the economic recovery has significantly over-promised and under-delivered,” KBC chief economist Austin Hughes said.
“Our sense is that the downgrading of sentiment through 2016 reflects both the reality of a notably more uncertain and challenging economic environment as well as the absence of a broadly felt improvement in the living standards.”
Hughes said that at current levels, the index is still consistent with a continuing increase in consumer spending but the flagging momentum was likely to stop it from moving onto an even stronger trajectory.
The decline in sentiment was also broadly based. Four of the five main elements of the index declined, with the exception of the jobs component, reflecting the most consistent aspect of the Irish recovery that has halved the unemployment rate in five years to just over 7 percent.
“It is important to emphasise the December survey does not suggest Irish consumers are bracing themselves for an economic Armageddon,” Hughes said. “It is simply telling us that there is far less certainty that the Irish economy will deliver broadly felt growth in the year ahead.”
Reporting by Padraic Halpin; Editing by Catherine Evans