DUBLIN (Reuters) - Irish consumer sentiment slipped in August after local COVID-19 lockdowns and stricter nationwide restrictions that the survey’s authors said may cause some to re-assess how long the disruption will last.
Ireland has adopted one of the most cautious approaches in Europe in fighting the virus, with a slower reopening of its economy and maintanance of many restrictions for longer failing to halt a fresh spike in new cases this month.
The KBC Bank consumer sentiment index fell to 58.9 from 62.6 in July. That was still well above a low of 42.6 in April when activity ground to a near halt and led to the largest monthly drop on record in what was Europe’s fastest growing economy.
“There have been some very positive elements in recent spending data that, together with the trend in consumer confidence in recent months, point to a clear turnaround in sentiment and spending from April’s low-point,” KBC Ireland chief economist Austin Hughes said.
“However, the muted survey results for both July and August suggest that we may be seeing a limited rebound rather than the first signs of a lasting recovery in Irish economic conditions of late.”
Hughes said the August data should not be seen as signalling any major mood swing on the part of Irish consumers and that in the circumstances of reimposed restrictions, it might be argued that the decline was reasonably contained.
With elevated uncertainty but spending power supported and some ‘pent-up’ demand ready to be released, it is possible that the sentiment survey could overstate the weakness in consumer spending in the near term, he added.
“The key unknown is whether sentiment or spending will adjust as 2020 progresses,” Hughes said.
Reporting by Padraic Halpin; editing by Emelia Sithole-Matarise
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